Independent News & Media Regulatory News (INM)

INM REPORTS OPERATING PROFIT OF €75.5 MILLION AND FURTHER SIGNIFICANT PAYDOWN OF DEBT

Ticker: (Bloomberg) INM.ID/INM.LN and (Reuters) INME.I/INME.L

Dublin/London 22 March 2012: The Board of Independent News & Media PLC ('INM' or the 'Group') today announced the Group's full year results for the 12 months ended 31 December 2011, which are in line with prior market guidance. A detailed presentation on these results is available on the Group's website inmplc.com.

HIGHLIGHTS

§ Operating Profit, pre-exceptionals, of €75.5 million (-8.6% on 2010)

§ Underlying* Revenue down 5.6% (Reported Revenue down 10.9% on 2010)

§ Operating Costs were reduced by 11.3% to €482.5 million, despite a significant newsprint price increase in Island of Ireland and investment in digital

§ EBITDA of €102.2 million (including dividends received of €15.8 million)

§ Operating Margin of 13.5%, up 30bps on 2010

§ Continued progress in digital, with underlying revenue growth of 9.6%

§ Expansion of Irish Education business through acquisition of International House Dublin

§ Earnings Per Share (pre-exceptionals) of 9.8 cent

§ Continued significant reduction in Net Debt, down by €46.8 million (9.9%) to €426.8 million

* Underlying - in constant currency, excluding The Independentand Independent on Sunday titles in the UK (disposed of in April 2010) and compares 52 weeks in both 2011 and 2010

- PERFORMANCE OVERVIEW -

The Group reported an Operating Profit before Exceptionals of €75.5 million, which was €7.1 million behind 2010. Underlying Group Revenue fell by 5.6% as very challenging trading conditions continued to prevail in Island of Ireland. Revenue from the South African division failed to match that of 2010, when it was boosted by the once-off revenue associated with the hosting of the FIFA World Cup. Underlying advertising revenue was down 6.2% and underlying circulation revenue was down 2.2%.

In the face of significant economic headwinds, underlying Operating Costs were reduced by €21.6 million. These reductions were achieved despite significant newsprint and energy price increases outside the control of the Group and investment in new and successful digital enterprises.

Despite the difficult macroeconomic conditions, INM has maintained, and in some cases improved, its leading market share position. All the Group's titles are profitable, while competitors, particularly in Ireland, struggle. The Irish Daily Star Sunday, in which INM was a 50% shareholder, and the Sunday Tribune, in which INM was a 29.9% shareholder, ceased publication in January and February 2011 respectively.

Significant and strategic investments have been made in the Group's digital operations with underlying revenue growth of 9.6% in 2011. GrabOne.ie, an online coupon deals site, was launched in May 2011 and has expanded rapidly. It is already the No. 1 Irish-owned deals site and is operating in seven distinct geographic markets on the island of Ireland and has the strongest social media presence across the online coupon market.

In South Africa, the Group has also made strategic investments in the deals and coupon markets. It has a 51% stake in Vuvuplaza.com, launched in early 2011. This is a daily deals operator similar to GrabOne. The Group has acquired a 49% stake in Mypricingguru.co.za ('MPG') which is optimised for mobile phone platforms and offers a 'best price on demand search portal' linked to customer special offer alerts.

CarsIreland.ie, in which INM has a 33.3% shareholding, showed encouraging growth and the Group launched a new Irish recruitment site, findajob.ie,in alliance with Europe's largest online recruiter, Stepstone. A new online editor was appointed to independent.ie and in November 2011 it became the largest online newspaper publishing site in Ireland, according to comScore Media Metrix Newspaper category report.

Net Exceptional Charges After Tax totalled €94.8 million. These primarily related to non-cash impairment charges on intangible assets in the Island of Ireland, as well as INM's 30.4% share of APN News & Media Limited's ('APN') exceptional charge. The APN charge mainly related to the non-cash impairment of its New Zealand mastheads.

Further significant deleveraging was achieved in 2011 with Net Debt reduced by €46.8 million, or nearly 10%.

Commenting on these results, Gavin O'Reilly, Group Chief Executive Officer, said:

"2011 was another challenging year for our industry. Ireland's economic prospects stabilised throughout the year but consumer demand, and spending, did not return to the domestic economy as austerity measures and the Eurozone debt crisis, in particular, weighed on sentiment. General trading conditions in South Africa were also subdued in the year following the euphoria of that country hosting the World Cup. However, our Zulu language titles continue to make excellent gains in circulation and are attracting an increasing number of advertisers.

"Against this backdrop, the Group has delivered an EBITDA, including dividends received, of more than €102 million. We have reduced our Net Debt by a further €47 million, or 10%, and have reduced underlying Operating Costs by in excess of €21 million.

"We continue to maintain or improve market share and have made important investments in digital. GrabOne.ie, for example, has exceeded our expectations since launch and underlying digital revenue rose by nearly 10% in 2011.

"Forecasting in the current climate is very difficult and, at present, advertising conditions remain challenging and erratic. There has been some encouraging trading in recent weeks, particularly in Ireland, but visibility remains short and susceptible to influence by macro-economic factors.

"INM has a strong portfolio of market-leading and profitable titles. The Group also has a well invested and increasingly efficient asset base, with no significant near-term capital expenditure requirements. INM is committed to continued cost vigilance and we have strong operating leverage in our business to translate any improvement in market conditions directly to our bottom line. Our focus is on maximising available cash flow for continued debt paydown, which will deliver value for our shareholders."

- 2011 OPERATIONS REVIEW -

ISLAND OF IRELAND

The Island of Ireland division combines all of INM's operations in the North and South of Ireland and is the largest media operation across the 32 counties. Revenue of €363.4 million was down 8.9% on 2010 in what continues to be a very challenging economic environment.

The ongoing financial crisis across the Eurozone and the continuation of weak economic conditions across the island of Ireland resulted in an €8.3 million reduction in operating profits during 2011. In this challenging media landscape, continued cost vigilance again insulated the Group from a large percentage of the revenue reduction, with costs down €27.4 million, or 7.9%, despite very significant year-on-year newsprint price increases.

The advertising market experienced a further decline in 2011, albeit at a lesser rate than experienced throughout 2010. The Group's market-leading publishing brands (Irish Independent, Sunday Independent, Evening Herald, Sunday World, Belfast Telegraph, Sunday Life and 13 regional titles) ensured it was in the best possible position to benefit from media spend but, reflecting the tough market conditions, these titles experienced an 11.2% underlying advertising revenue reduction. Given the market backdrop, no advertising category showed growth on 2010, but the travel, ROP and magazine categories produced the strongest performances. The property market continues to be at a virtual standstill, whilst recruitment showed a decline on 2010 levels.

Against this difficult backdrop, and in what continues to be an extremely competitive market, circulation revenues for the Island of Ireland remained reasonably solid, with underlying revenues for the full year down 2.8% on last year.

Despite these challenging market conditions, the Group's titles maintained, and in some cases advanced, their market-leading positions in the second six months of the year. The Irish Independent remains the clear No. 1 quality daily newspaper. With an ABC1 of 131,161 copies (48.7% share of quality market) and an average daily readership of 477,000 readers2, it continues to dominate the quality morning market, with a readership of just less than the combined readership of its two closest competitors.

The Republic of Ireland's largest selling newspaper, the Sunday Independent, produced another very strong performance during the six month period, recording an ABC1 figure of 250,641 copies. It continues to be the Republic of Ireland's most-read newspaper and, in attracting 939,000 readers2 every Sunday, has by far the largest regular audience in Ireland across any advertising medium, thereby presenting advertisers with the most compelling route to market on the island of Ireland.

The Evening Herald continues to show the strength of its brand in an evening market that remains challenging, recording an ABC1 figure of 62,411 copies and attracting a very strong 234,000 daily readers2 in 2011, further cementing its place as Dublin's most-read newspaper. The Evening Herald's desire to deliver the best possible value in the marketplace was further underlined during 2011 by its cover price reduction to €1, presenting consumers with an excellent mix of content at a very compelling price point.

The Sunday World continues to be Ireland's largest-selling and most-read tabloid newspaper, delivering an ABC1 of 251,455 copies and attracting 819,000 readers2 every Sunday. Following the closure of the News of the World in 2011, the Sunday World, with a market share in excess of 50% and delivering 481,000 readers more than its nearest competitor in this market, now has a position of absolute leadership in the popular market every Sunday, making it an essential component of any media schedule.

Overall, INM's share of the Sunday newspaper market increased by more than 9% in 2011 with a total Sunday readership for INM titles of 1,758,0002.

The Belfast Telegraph Group remains the dominant player in the Northern Ireland newspaper market, with the Belfast Telegraph the clear No. 1 quality newspaper, recording an ABC1 (Mon - Sat) of 53,771 copies, whilst Sunday Life achieved an ABC1 of 54,004 copies.

The trading conditions experienced by the Group's 12 paid-for weekly regional titles (in counties Cork, Kerry, Dublin, Louth, Wexford, Wicklow and Sligo) continued to be demanding due to the more difficult economic backdrop prevalent in regional Ireland. However, despite these challenging conditions, each of the Group's regional operations remains profitable. The Group's ability to react to market conditions was underscored by the decision to relaunch the Carlow People as a freesheet during 2011, to better position the paper in the market within which it operates, with a very encouraging performance since launch.

metro herald, the Group's joint venture publication with the Irish Times and DMGT, is Dublin's only daily free newspaper. It made excellent progress in its first full year's trading (following its launch in 2010), with an ABC1 verified daily distribution of 59,975 copies. The Group's other joint venture publication, the Irish Daily Star, delivered another solid result in what remains a challenging daily tabloid market, recording an ABC1 of 81,105 copies.

The Independent Digital suite of publishing platforms, that includes the market-leading independent.ie and 14 local news brands/titles, continued to make excellent progress during 2011, with its average monthly page impressions and unique users showing year-on-year growth of 18.9% and 33.7%, to 37.3 million and 3.5 million respectively. Throughout 2011, independent.ie continued to innovate its product offering in order to deliver the best possible audience delivery solutions to advertisers, which was pivotal to driving Independent Digital's revenue growth. independent.ie became the largest online newspaper publishing site in Ireland in November 2011 according to the comScore Media Metrix Newspaper category report. During 2011, the Group relaunched its online recruitment site as findajob.ie in conjunction with Stepstone, with the new offering being very well received, thereby positioning the Group to benefit from an upturn in the online recruitment market, when it emerges.

During the year, in partnership with APN, the Group also launched an online retailing brand, GrabOne.ie. Commencing as a daily deals business, the operation has performed very well since launch and has become the largest Irish-owned online deals business. The brand now has a presence in seven distinct geographic markets - Dublin, Cork, Belfast, Limerick/Shannon, South East, Kerry and Galway and has recently launched a new Escapes offering that will focus on great deals for accommodation and holiday/leisure activities. In another development, the Group also acquired a 33.3% shareholding in CarsIreland.ie during 2011, thereby giving the Group a strong presence in the fast growing online motors classified space. The site has seen encouraging growth in both traffic and dealer subscriptions.

The Group also owns Northern Ireland's largest online newspaper portal, with its award-winning website, BelfastTelegraph.co.uk (with an average of 1.3 million monthly unique users and 15.1 million monthly page impressions throughout 2011 - an increase of 2.5% and 10.1% respectively on 2010) and the leading classified portals: PropertyNews.com; NIjobfinder.co.uk; and NIcarfinder.co.uk. All sites are fully integrated with the print products to enhance cross-selling opportunities and are well positioned for future growth. In line with the Belfast Telegraph's multi-platform publishing strategy, subscription versions of the paper were launched for both the iPad and iPhone in June 2011.

Newspread, the largest newspaper and magazine wholesale and distribution business on the island of Ireland delivered a very strong result in 2011, despite the challenging distribution market within which it operates. This was largely as a result of developing various new business lines, which it delivered through its extensive retail branch network across the whole island.

In education, Independent Colleges widened its student offering in 2011 with important new Diploma and academic courses, including an MSc in Accounting with Finance validated by the University of Chester and a government funded 'Springboard' programme designed to assist the creation of employment and upskilling opportunities. To complement current domestic college activity and to capitalise on recent progressive government changes to international student study opportunities in Ireland, International House Dublin ('IHD') was acquired by the Group in December 2011. IHD is one of the largest English language learning schools in Dublin. It is a member of the IH World Organisation and has recently been accredited by EAQUALS. In addition to its English language teaching, IHD is a major teacher training provider offering year round CELTA and DELTA courses from the University of Cambridge.

1 ABC July to December 2011

2 JNRS 2011

SOUTH AFRICA

The South African division reported revenue of €194.6 million, which was down 5.6% on 2010. The revenue contraction resulted from generally tough trading conditions in a number of consumer led sectors and the impact of strong once-off advertising support received around the hosting of the FIFA World Cup in 2010. General business activity was hampered by rising inflation and subdued consumer spending.

Operating profits of €37.6 million declined by €5.9 million as a consequence of the softer revenue climate coupled with inflationary cost pushes.

Total operating costs remained tightly contained and only increased by an underlying 1.7%, despite overall inflation running in excess of 6% for most of the year. Cost pushes were encountered mostly in payroll, utility costs - especially electricity costs, which rose by 25% year-on-year - and distribution costs relating to steeply rising fuel prices. Strict cost containment measures and ongoing business re-engineering initiatives, including the closure and outsourcing of the Cape Town printing operation, have resulted in a permanent lowering of the operational cost base.

Outsourcing of the Group's Cape Town printing enabled the company to move its printing to a more modern production facility providing the Group's papers with better quality, greater product flexibility, more colour configurations, as well as positive cost and efficiency improvements. The closure of the printing plant further enabled the Group to dispose of its warehouse and main buildings, generating proceeds of €9.3 million and additional cost savings.

Circulation trends overall in South Africa for 2011 remained soft and continued to trend downwards, with the overall market reflecting a further year-on-year decline of around 6%. In this environment, INM's circulation volumes (down 4.4%) held slightly firmer than competitor titles, leading to a drop in underlying circulation revenue of 0.5% during 2011. Competitor titles' volumes were down approximately 7%. In line with overall domestic market trends, the sales of most of the Group's mature titles - especially those on sale in the afternoons and on Saturdays - were either in line with or down year-on-year. Inflationary cover price increases were passed through on all titles towards the latter part of the year.

Against the general circulation trend, Isolezwe, the Group's Zulu language newspaper, continued its strong growth to 107,653 copies1 (up 7.2%) for 2011. Daily readers of Isolezwe in 2011 were 834,0002.The Sunday edition (Isolezwe ngeSonto) also grew strongly to an average in 2011 of 80,053 copies1 - up 12.7% from 71,016 copies1 in 2010, with readership for 2011 of 826,5002. On the back of the success being achieved in the Zulu franchise, the Group launched a Saturday edition (Isolezwe ngoMgqibelo) in August 2011 which has been well received by the market. Sales of Isolezwe ngoMgqibelo for the 19 weeks in 2011 averaged 58,851 copies.

The Group's biggest selling daily newspaper is The Star, with an average ABC of 139,883 copies1 in 2011 and 608,0002 readers. The Star operates in the highly competitive Gauteng region which has seen the launch of a new lower priced morning competitor in 2010 and a significant shift to a low-price/free distribution model.

The afternoon papers in both KwaZulu Natal and Cape Town remained under pressure with the average copy sales of the Daily News (34,695 copies1) and the Cape Argus (45,529 copies1) declining by around 10% and 12% respectively. In response to these declines, subsequent to the year end, the Group has converted the Cape Argus to a compact format and introduced a morning edition of the paper. The new offering was successfully launched on 9 March 2012.

The Cape Times, the Group's high-end morning paper in the Cape Town market and The Mercury in KwaZulu Natal, while also feeling the impacts of the downturn, have fared slightly better in the tough market conditions. The Cape Times' average sale of 44,055 copies1 is down by 1.8% and The Mercury, at 32,262 copies1, is down 5.7%.

The Group's major weekend newspaper offerings are the Saturday Star (with an average sale of 100,645 copies1), Sunday Tribune (83,400 copies1) and the Weekend Argus (72,335 copies1). Against the general trend, The Sunday Independent, which operates in the upper market niche, mainly in Gauteng, averaged a weekly sale of 39,206 copies1, which was 0.6% higher than 2010.

Within the print media arena INM's advertising market share remained relatively flat despite new entrants in the highly competitive Gauteng region, with underlying advertising revenue falling by 2.1%. Most affected were the brand and agency retail categories on account of the additional advertising spend from the 2010 FIFA World Cup and a slowdown in advertising by financial institutions, mobile phone operators and some of the major supermarket groups. In addition, classified volumes remained soft, especially in the recruitment and property sectors.

Digital revenues, achieved through the iol.co.za portal ('IOL') and more than 40 subsidiary sites, enjoyed encouraging underlying revenue growth of 18.8% during 2011. During the year IOL built nine new title sites, seven mobile sites and iPad and iPhone news apps. IOL consolidated its position as the second largest online news portal in South Africa, providing average monthly unique users of 2.1 million and page impressions of 30.4 million which was 7.2% up year-on-year. IOL's expanding network of sites continued to build a strong base for revenue growth and deepen the penetration of the local advertising market.

INM has also made strategic investments in the deals and coupon markets. It has a 51% stake in Vuvuplaza.com, launched in early 2011. This is a daily deals operator similar to GrabOne, which is currently being rolled out across the major urban centres of Johannesburg, Pretoria, Cape Town, Durban and Bloemfontein. The Group has acquired a 49% stake in Mypricingguru.co.za ('MPG') which is optimised for mobile phone platforms and offers a 'best price on demand search portal' linked to customer special offer alerts. Users can also use MPG to purchase mobile airtime, lottery tickets and perform a suite of digital transactions. MPG is currently being rolled out.

Condé Nast Independent Magazines' high-end titles performed well in 2011, producing operating profit growth of 8.4% driven by positive improvements in both advertising and circulation revenue and continued tight control on costs. The launch of GQ digital in November 2010 and Glamour digital in October 2011 has been successful, with higher than expected advertising revenue. There has been a strong response from clients seeking 360 degree solutions and digital agencies who find the sites appealing.

1 ABC 2011 (average)

2 AMPS readership 2011 (average)

- 2011 FINANCIAL REVIEW -

The Group reported an Operating Profit before Exceptionals of €75.5 million, down 8.6% on 2010, and in line with previous market guidance. Net Profit attributable to equity shareholders (pre-exceptionals) was €54.2 million, up 4.8% on 2010. Basic earnings per share (pre-exceptionals) totalled 9.8 cent, down 3.9% on 2010.

Performance

Reported Revenue was down 10.9% on 2010, with underlying Group Revenue down 5.6% on 2010. Underlying advertising revenue was down 6.2%, with Island of Ireland down 11.2% and South Africa down 2.1%. The weak economic conditions in Ireland continued to impact on Irish advertising but advertising in South Africa showed some pickup in the second half of the year. Group circulation revenues proved more resilient and underlying circulation revenue was only down 2.2%. EBITDA (adjusted to include dividends received from APN and other associates) was €102.2 million in 2011, down 7.6% on 2010.

Operating Costs and Margins

Operating costs continued to be well controlled, with reported costs of €482.5 million, down 11.3%, assisted by the disposal of the London Independent in April 2010. Underlying costs were down €21.6 million (4.2%) on 2010. This good cost performance produced an operating margin of 13.5%. Within this, the Island of Ireland and South African publishing operations reported margins of 17.6% and 19.3% respectively, which rank at the top end of INM's peer group.

Share of Results of Associates and Joint Ventures

The Group's Associates and Joint Ventures mainly comprise of its 30.4% shareholding in APN (INM's equity stake is currently valued on the ASX at approx. €140 million), its 50.0% shareholding in the Irish Daily Star, its 33.3% shareholding in metro herald and its 33.3% shareholding in CarsIreland.ie.

INM accounted for APN (in which it is the largest shareholder) as a subsidiary undertaking up to 31 December 2010. At this date, APN was no longer consolidated in INM's Group financial statements. From 1 January 2011, INM's share of APN's Net Profit is reported in INM's Income Statement within 'Share of Results of Associates and Joint Ventures.'

APN reported revenue growth of 1% to A$1,072 million for the year. EBIT was down 18% to A$166 million and Net Profit After Tax (NPAT) before exceptional items was down 24% to A$78 million. APN's performance, which was in line with market guidance, reflected weak retail markets and a number of natural disasters (the floods in Queensland and devastating earthquakes in Christchurch) impacting on the Australian and New Zealand publishing divisions. Partly offsetting this was a strong contribution from APN's outdoor division and a solid performance from its radio division.

Subsequent to the year end, APN announced that it had agreed to form a joint venture with Quadrant Private Equity to target expansion within the Outdoor advertising segment in Australia, New Zealand and Asia. The Outdoor joint venture will incorporate all of APN's wholly-owned Outdoor businesses in Australia and New Zealand as well as APN's 50% interests in Rainbow Premium Outdoor, in Indonesia. The transaction values APN Outdoor at A$272 million on an Enterprise Value basis and will generate gross cash proceeds of approximately A$190 million for APN on completion.

APN declared a partially franked final dividend of A$0.05 per share for 2011, payable on 30 March 2012 (dividend payable to INM of A$9.6 million). Together with APN's 2011 interim dividend of A$0.035 per share, this represents an annual dividend of A$0.085 per share by APN (dividend payable to INM of A$16.3 million).

Exceptional Charges

The Group recorded an Exceptional Charge (net of tax) of €94.8 million in 2011. The charge mainly relates to an €87.2 million non-cash impairment charge on intangible assets arising in the Island of Ireland, which arose due to the continued economic downturn. In addition, INM's share of associates and joint ventures exceptional items was €29.5 million. This mainly relates to a non-cash impairment charge of €25.7 million arising in APN, which primarily relates to the New Zealand mastheads. This impairment is as a result of a number of factors, including the impact of the Christchurch earthquakes on the New Zealand economy, the slower than expected recovery of the advertising markets and the ongoing impacts of the global financial crisis. Exceptional items include a net tax credit of €30.8 million, which primarily relates to the recognition of tax losses available to the Group, together with tax credits on the impairment charges.

Finance Charges

There was a significant reduction in the net finance charge in 2011, down €14.6 million (30.3%) to €33.6 million. This reduction was primarily driven by the redemption of the €36 million PIK Note (which carried a 25% coupon) in late 2010 and early 2011 and by the reduced net debt levels in the Group.

Capital Expenditure

Capital expenditure was €6.9 million in 2011, well below the 2011 depreciation charge of €10.9 million. Capital spend is projected to remain below current depreciation levels for the next few years as all major capital expenditure projects across the Group are complete and, as a result, no significant capital investment is expected in the medium term.

Net Debt

Net Debt at 31 December 2011 was €426.8 million, down €46.8 million (9.9%) on 2010. Net Debt to EBITDA (including dividends received) stood at 4.2 times at the end of 2011 (compared to 4.3 times at the end of 2010). Net Debt has reduced by more than €400 million (approx. 50%) over the last three years and the focus remains on further deleveraging.

Subsequent to the year-end, the Group agreed with its banks an amendment to its financial covenants and scheduled debt reductions, which provide the Group with significant financial headroom. INM expects to refinance well in advance of the May 2014 debt maturity.

Dividends

The Directors do not propose recommending a dividend for 2011 and believe there is currently greater scope to create shareholder value through continued debt paydown.

Financial Calendar 2012

● Annual General Meeting 8 June 2012 ● Interim Results 31 August 2012

- ENDS

For further information, contact:

INDEPENDENT NEWS & MEDIA PLC

GROUP INCOME STATEMENT

* Note 4

** Discontinued operations: this represents the results of APN for 2010 which, under accounting standards, were deemed to be a discontinued operation in 2010 even though INM's shareholding in APN remained unchanged at that time. With effect from 2011 onwards, INM's share of APN's results is reported as part of "Share of results of associates and joint ventures". See note 10 for further details.

GROUP STATEMENT OF COMPREHENSIVE INCOME

GROUP BALANCE SHEET

GROUP STATEMENT OF CHANGES IN EQUITY

* 2011: Other of (€1.4m) includes cash flow hedging reserve (€2.0m) and available-for-sale financial assets reserve €0.6m. (2010: Other of €0.1m includes cash flow hedging reserve (€4.2m) and available-for-sale financial assets reserve €4.3m.)

GROUP CASH FLOW STATEMENT

GROUP CASH FLOW STATEMENT (continued)

* Discontinued operations represent the net cash flows of APN in 2010 which, under accounting standards, were deemed to be a discontinued operation in 2010 even though INM's shareholding in APN remained unchanged at the time APN was deemed to be a discontinued operation. From 2011 onwards, APN's cash flows are not reported as part of INM's cash flows except INM's share of APN's dividends paid which are reported as part of dividends received within 'Investing Activities'. In 2010 as a result of the change in accounting treatment from subsidiary to associate at 31 December 2010, separate cashflows have been presented for 'continuing' and 'discontinued' operations. Dividends received from APN in 2010 have been shown as part of the Group's continuing cashflows within 'Investing Activities' and have been shown as an outflow under financing in APN - discontinued operations. APN has been treated as an associate with effect from 31 December 2010.

NOTES TO THE FINANCIAL INFORMATION 

1. Basis of Preparation of Financial Information under IFRS

Basis of Preparation and Going Concern

This financial information has been prepared on the going concern basis, which assumes that the Group will continue to be able to meet its liabilities as they fall due for the foreseeable future.

The Group's Bank Debt Facilities (the "Bank Facilities"), which were entered into in 2009, based upon a 4½ year maturity of May 2014, contain certain covenant tests, which have to be assessed quarterly, relating to Debt to EBITDA, EBITDA to Net Interest and Cashflow Cover. Amounts of €439.3m in respect of these Bank Facilities are included within borrowings (note 11) at 31 December 2011. Failure of a covenant test would render the facilities in default and repayable on demand at the option of the banks if an amendment or waiver is not granted by the banks in advance.

The Group was compliant with its banking covenants during 2011 and is budgeting to be both profitable and cash generative in 2012.

Given the impact of the global financial crisis and the continued difficult trading conditions within which the Group is currently operating, the Board has undertaken a detailed review of the Group's anticipated future results and working capital requirements, and subsequently stress-tested these. These detailed, bottom-up financial forecasts have been prepared by, and reviewed with, each of the Group's major business units. The extent of this review reflects the still-uncertain economic outlook, and the weakness in advertising revenues experienced during 2011. The forecasts reflect key assumptions, based on information available to the Directors at the time of the preparation of this financial information, and include:

- Detailed monthly forecasting by business for FY12, reflecting trends experienced up to the date of preparation; and

- Future advertising revenues for FY13-FY14 based on regional management's assessment of trends across individual regions and principal operating units.

The critical assumptions underlying the forecast were then stress-tested to ensure sufficient financial covenant headroom exists to cope with a reasonable level of negative movement in the key assumptions.

Having completed this forecasting process, the Group sought the consent of its banks in early 2012 to amend the Bank Facilities to provide for financial covenant headroom up to and including June 2013, and to reschedule €28m of the December 2012 facility reduction. All of the Group's banks have agreed to these amendments to the Bank Facilities. The Directors expect that the Group will meet these amended covenants under the Bank Facilities and consider that there is sufficient liquidity available to the Group for a period of at least one year from the date of approval of the Group's 2011 Annual Report.

Separately, with the engagement of all its banks, the Group is now considering its future refinancing requirements (including the capital repayments falling due in June and December 2013 and relevant covenants for the period post June 2013), with the ultimate objective of refinancing the Bank Facilities in advance of their scheduled maturity in May 2014. The Group recognises that the current uncertain economic environment and the turmoil in financial markets gives rise to a level of uncertainty with respect to the Group's ability to meet its future financial covenants and to continue to access financing facilities on commercially acceptable terms.

While there can be no certainty that refinancing discussions with the banks will be successfully concluded, the Group's banks remain supportive, with ongoing constructive discussions taking place as evidenced by the recent amendments. The Directors are of the opinion that sufficient options and time are available to the Group to enable a satisfactory refinancing of the Bank Facilities.

NOTES TO THE FINANCIAL INFORMATION (continued)

1. Basis of Preparation of Financial Information under IFRS (continued)

Basis of Preparation and Going Concern (continued)

After making due enquiries, the Directors have a reasonable expectation that the Group and Company will be able to operate within the terms and conditions of the Group's financing facilities and has and will have adequate resources to continue in operational existence for the foreseeable future. For this reason, the Directors continue to adopt the going concern basis in preparing this financial information.

Financial Information

The financial information in this announcement does not constitute the statutory accounts of the Company and the Group, a copy of which is required to be annexed to the Company's annual return to the Companies Registration Office in Ireland. A copy of the statutory accounts in respect of the year ended 31 December 2011 will be annexed to the Company's annual return for 2011. The annual report and accounts will be approved by the Board of Directors in due course. Accordingly, this financial information is unaudited. A copy of the statutory accounts required to be annexed to the Company's annual return in respect of the year ended 31 December 2010 has been annexed to the Company's annual return for 2010 to the Companies Registration Office.

The 2011 statutory accounts of the Company will be available on the Company's website inmplc.com as of 30 April 2012. Consistent with prior years, the full financial statements for the year ended 31 December 2011 and the audit report thereon will be completed and available to all shareholders at least 20 working days before the AGM.

General Information

In accordance with EU Regulations, the Group is required to present its annual consolidated financial statements for the year ended 31 December 2011 in accordance with EU adopted International Financial Reporting Standards (IFRS) and IFRIC interpretations and with those parts of the Companies Acts, 1963 to 2009, applicable to companies reporting under IFRS. This financial information comprises the Group Balance Sheets as of 31 December 2011 and 31 December 2010 and related Group Income Statements, Cash Flow Statements, Statements of Comprehensive Income, Statements of Changes in Equity and selected notes for the years then ended of Independent News & Media PLC. This financial information for the years ended 31 December 2011 and 31 December 2010 has been prepared in accordance with the Listing Rules of the Irish Stock Exchange.

The consolidated financial statements are prepared under the historical cost convention with certain financial instruments measured at fair value. Except as described below, the accounting policies and methods of computation and presentation adopted in the preparation of this financial information are consistent with those applied in the Annual Report for the year ended 31 December 2010 and are described in those financial statements on pages 59 to 68.

The following interpretations or amended standards are mandatory for the first time for the financial year beginning 1 January 2011 and are either not relevant to the Group or they do not have any significant impact on this financial information:

·; IFRIC 19, Extinguishing Financial Liabilities with Equity Instruments;

·; IAS 24 (Revised) Related Party Disclosures; and

·; IAS 32 (Amendment) Classification of Rights Issue.

The Group has also adopted the 'Improvements to IFRS' standard, (effective for financial periods beginning on or after 1 January 2011). The IASB has issued the 'Improvements to IFRS' standard which amends a number of standards, basis of conclusions and guidance. The improvements include changes in presentation, recognition and measurement plus terminology and editorial changes. These amendments do not have a significant impact on this financial information.

NOTES TO THE FINANCIAL INFORMATION (continued)

2. Risks and Uncertainties

The principal risks and uncertainties facing the Group were detailed in the Directors' Report and in note 32 to the 2010 Annual Report and these continue to be considered the most likely to influence the performance of the Group. The key risks remain those that relate to liquidity risk and the general economic outlook for the global advertising markets within which the Group operates.

Liquidity

As detailed in note 1, the Group's Bank Facilities contain certain covenant tests, which have to be assessed quarterly. Failure of a covenant test would render the facilities in default and repayable on demand at the option of the banks if an amendment or waiver is not granted by the banks in advance. While the Group has successfully renegotiated certain elements of its Bank Facilities in 2012, to ensure that sufficient financial covenant and liquidity headroom is available to the Group for a period of at least one year from the date of approval of the Group's 2011 Annual Report, the Group is engaged in ongoing discussions with the Group's banks in relation to its ongoing refinancing requirements thereafter including capital repayments in June and December 2013 and the maturity of the Bank Facilities in May 2014. The Group recognises that the current uncertain economic environment and the turmoil in financial markets gives rise to a level of uncertainty with respect to the Group's ability to meet its future financial covenants and to continue to access financing facilities on commercially acceptable terms.

However the Directors are working on a pro-active basis with the banks, with the objective of refinancing the Bank Facilities well in advance of its maturity in 2014. While there can be no certainty that refinancing discussions with the banks will be successfully concluded, the Group's banks remain supportive, with ongoing constructive discussions taking place as evidenced by the recent amendments. The Directors are of the opinion that sufficient options and time are available to the Group to enable a satisfactory refinancing of the Bank Facilities.

Advertising

The global advertising environment continues to be depressed due to weak economic activity. It is uncertain when the economies in which the Group operates will emerge from the current economic recession and therefore the outlook for consumer advertising in the Group's markets remains uncertain.

3. Segmental Reporting

Segment information is presented on the same basis as that used for internal reporting purposes. Operating segments are reported in a manner consistent with the internal reporting provided to the Chief Operating Decision Maker (CODM). The CODM has been identified as the Board of Directors. The reportable segments based on the internal reporting information provided are listed in the table on the following page. The key performance measure that is reviewed for these segments is operating profit/(loss) before exceptional items. Exceptional items are reviewed at a level higher than these operating segments and appear as a reconciling item from the key performance measure reviewed by the CODM to the IFRS result. Finance income and expense, share of result of associates and joint ventures and taxation are reviewed and considered by the CODM at a Group level only.

The Group continues to report its revenues and operating profit before exceptional items by geographical areas with a further analysis of the geographical areas by class of business also provided.

The Group's subsidiaries operate in two geographical areas: Island of Ireland and South Africa. The Group previously operated in the United Kingdom and this business was disposed of on 30 April 2010.

NOTES TO THE FINANCIAL INFORMATION (continued)

3. Segmental Reporting (continued)

The components of the Group whose operating results are regularly reviewed by the CODM to make decisions about the allocation of resources, and in performance assessment, are contained in the table below. The Group's Australasian operations were previously reported to the Board of Directors as part of the Group's subsidiaries operations. However, with effect from 31 December 2010 (see note 10), the Group's investment in APN is treated as an associate and the results are reported to the CODM as part of the Group's share of results of associates and joint ventures. Thus the results of the Group's Australasian operations for 2010 have been restated to reflect this on a consistent basis.

* Island of Ireland - Non-Publishing contains the education business.

NOTES TO THE FINANCIAL INFORMATION (continued)

3. Segmental Reporting (continued)

APN's revenues for the year ended 31 December 2011 were €754.5m (2010: €712.1m) and APN's operating profit before exceptional items for the year ended 31 December 2011 was €121.0m (2010: €139.2m).

NOTES TO THE FINANCIAL INFORMATION (continued)

4. Exceptional Items

Exceptional items are those items of income and expense that the Group considers are material and/or of such a nature that their separate disclosure is relevant to a better understanding of the Group's financial performance.

* Discontinued operations in 2010 represent the exceptional items (net of tax and non-controlling interest) in respect of APN which, under accounting standards, were deemed to be a discontinued operation in 2010 even though INM's shareholding in APN remained unchanged. From 2011 onwards, INM's share of APN's exceptionals is reported as part of "Share of results of associates and joint ventures".

(i) 2011

Primarily relates to the following:

(a) Non-cash impairment charges of €96.4m as follows:

1. €87.2m due to non-cash impairment charges on intangible assets in the Island of Ireland. This impairment is as a result of a number of factors, including the impact of the global financial crisis and the prolonged economic downturn in the Island of Ireland and the resulting impact of these on the expected recovery of the advertising markets in the Island of Ireland;

2. €3.0m due to non-cash impairment charges on certain property, plant and equipment in the Island of Ireland;

3. €4.2m non-cash impairment charge on available-for-sale financial asset investments; and

4. €2.0m non-cash impairment charge on investments in and loans to associates and joint ventures.

(b) €3.9m non-cash deemed disposal loss on the Group's investment in APN;

(c) €7.5m gain on the disposal of property, plant and equipment in the Group's South African business; and

(d) a net gain of €1.5m arising on other items.

2010

Primarily relates to the following:

(a) a €45.4m gain which arose on the disposal of the Group's 13.5% stake in Jagran Prakashan Limited (India);

(b) a €14.8m net loss on the Group's disposal of the The Independent and the Independent on Sunday in the United Kingdom;

(c) €53.1m due to a non-cash impairment/accelerated depreciation charge, arising on certain property, plant and equipment, intangible assets and on loans to associates and joint ventures; and

(d) a net gain of €1.2m arising on other items.

NOTES TO THE FINANCIAL INFORMATION (continued)

4. Exceptional Items (continued)

 (ii) 2011

Primarily relates to the following:

(a) Headcount restructuring charges of €3.8m across the Group;

(b) Onerous contracts of €9.1m, in respect of property, other assets across the Group and a contract entered into with the London Independent in April 2010 on disposal of the Group's investment of that business which the Group now considers onerous; and

(c) a credit of €8.1m in respect of the Group's retirement benefit obligations arising on a curtailment gain of €6.9m in South Africa and a negative past service cost of €1.2m in the Island of Ireland.

2010

Relates to restructuring charges (€12.6m), a charge on the cancellation of share options previously granted to certain employees (€2.1m) and onerous contracts (€11.2m) arising across the Group. It also includes a credit of €14.5m arising on the Group's retirement benefit obligations.

(iii) 2011

Mainly relates to a non-cash impairment charge of €25.7m arising in APN News & Media Limited (APN) which primarily relates to the New Zealand mastheads. This impairment is as a result of a number of factors, including the impact of the Christchurch earthquakes on the New Zealand economy, the slower than expected recovery of the advertising markets and the ongoing impacts of the global financial crisis. The remaining net cost of €3.8m mainly relates to restructuring costs and asset write downs in APN and in the Star in Ireland.

(iv) 2010

Net gain of €21.2m (€25.8m after non-controlling interests), comprises a fair value gain of €27.5m arising on the deconsolidation of APN offset by €6.3m of exceptional items mainly relating to restructuring costs incurred within APN.

5. Net Finance Costs

6. Taxation

NOTES TO THE FINANCIALINFORMATION (continued)

6. Taxation (continued)

The total tax charge for the year is different from the standard rate of Corporation Tax in Ireland of 12.5% (2010: 12.5%). The differences are explained below:

The €29.6m deferred tax credit in respect of tax losses primarily represents the following:

1. The recognition of trading tax losses that were previously unrecognised as they now meet the recognition criteria to be brought on to the Group's Balance Sheet. The recognition of these trading losses is the primary reason for the increase in the Group's deferred tax asset on the Group's Balance Sheet from €28.8m at 31/12/2010 to €44.9m at 31/12/2011; and

2. The recognition of capital and other tax losses which now meet the criteria to be recognised. The recognition of these tax losses in the Income Statement is the primary reason for the decrease in the deferred taxation liability from €23.3m at 31/12/2010 to €4.5m at 31/12/2011, as these losses offset the deferred taxation liability that was previously recognised on the Group's Balance Sheet under IAS 12 in respect of the Group's mastheads.

Within the total tax credit of €22.6m (2010: €0.2m), a net credit of €30.8m (2010: €8.8m) is classified as exceptional tax. The Group has unrecognised deferred tax assets of €16.5m in respect of tax losses as at 31 December 2011.

Tax Effect on Items in Statement of Comprehensive Income

NOTES TO THE FINANCIAL INFORMATION (continued)

7. (Loss)/Earnings Per Share

* The results of APN for 2010, under accounting standards, are required to be shown separately as they were deemed to be a discontinued operation in 2010 even though INM's shareholding in APN remained unchanged. From 2011 onwards, INM's share of APN's results is reported as part of "Share of results of associates and joint ventures".

** The average number of shares outstanding for 2010 has been adjusted to reflect the share consolidation (on a one-for-seven basis) which took place in June 2010.

Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the year.

NOTES TO THE FINANCIAL INFORMATION (continued)

7. (Loss)/Earnings Per Share (continued)

For diluted earnings per share, the weighted average number of ordinary shares outstanding is adjusted to assume conversion of all potential dilutive options over ordinary shares once the adjustment does not reduce a loss per share.

Basic and diluted earnings per share before exceptional items are presented in order to give a better understanding of the Group's financial performance.

8. Share Capital and Dividends

The movements in the number of issued and fully paid ordinary shares were as follows:

There were no changes to the Company's Share Capital during 2011. No dividends were paid during the year and no final dividend will be paid in respect of the year ended 31 December 2011.

9. Reconciliation of Operating Profit before Exceptional Items to Cash Generated by Operating Activities

* Decrease in trade and other receivables on the Balance Sheet is mainly driven by tighter working capital management.

Within the Cash Flow Statement proceeds from issuance of ordinary shares is net of costs of issuance of €1.0m in 2010.

NOTES TO THE FINANCIAL INFORMATION (continued)

9. Reconciliation of Operating Profit before Exceptional Items to Cash Generated by Operating Activities (continued)

10. Other Items

(a) Retirement Benefits

The retirement benefit obligations as at 31 December 2011 in the Balance Sheet have increased by €15.0m to €147.0m (€122.4m relating to defined benefit pension schemes and €24.6m relating to a post-retirement medical aid scheme). This movement in the deficit is mainly driven by:

·; an actuarial loss of €32.2m as disclosed in the Group Statement of Comprehensive Income;

·; a credit of €8.1m in respect of the Group's retirement benefit obligations arising on a curtailment gain of €6.9m in South Africa and a negative past service cost of €1.2m in the Island of Ireland as per note 4;

·; a positive foreign exchange movement of €5.3m (mainly due to the movement in the South African Rand); and

·; a reduction of €3.8m in the deficit due to employer contributions being greater than the Income Statement charge.

Principal actuarial assumptions used for the defined benefit pension schemes in the Island of Ireland are as follows: