Independent News & Media Regulatory News (INM)

INM REPORTS REVENUES OF €539.7 MILLION AND

OPERATING PROFIT OF €59.7 MILLION

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

Dublin/London 26 April 2013: the Board of Independent News & Media PLC ('INM' or the 'Group') today announced the Group's results for the 12 months ended 31 December 2012. A detailed presentation on these results is available on the Group's website inmplc.com.

The Group's interim management statement in respect of the period from 1 January 2013 to 19 April 2013 is also published today.

Strategic Highlights

§ Agreement reached on a new bank deal (as announced earlier today) - will put the Group on a secure financial footing with a sustainable debt level, on completion of all stages

§ Recently announced sale of South Africa business for R2 billion (approx. €167m) before expenses - all net proceeds will be used to pay down bank debt

§ On full completion, the new bank deal will give the Group the flexibility to reposition itself to embrace opportunities in the digital arena and deliver further significant cost reductions, whilst continuing to invest in the Group's core print titles

Financial & Operating Highlights

§ Revenues of €539.7 million, down 3.3% (2.1% in constant currency)

§ Operating Profit, pre-exceptionals, of €59.7 million, down €15.8 million on 2011 - delivering an operating margin of 11.1%

§ EBITDA, pre-exceptionals, of €80.7 million (including dividends received of €11.1 million) for FY 2012

§ Operating Costs were reduced by €2.5 million despite inflationary cost increases in South Africa in excess of 5.7%, the year-on-year impact of the acquisition of International House Dublin ('IHD') and the launch of GrabOne. Excluding IHD and GrabOne, costs reduced by €9.2 million

§ Continued progress in digital, with revenue growth of 21.4% mainly driven by the successful rollout and full year impact of GrabOne in the Island of Ireland

§ Net exceptional charges after tax totalled €273.7 million primarily driven by non-cash asset impairments in APN and Island of Ireland and costs relating to headcount reductions of over 200 in 2012

- REFINANCING -

Further to the earlier restructuring announcement, the Group has entered into a restructuring agreement ('Lock-Up Agreement') with its banking syndicate, to effect an amendment to its Master Facility Agreement, which will become effective following the sale of its South African business. The Lock-Up Agreement puts a framework in place to allow for a multi-stage restructuring, comprising a number of interlinked stages. On successful implementation of these stages, including a proposed equity issue later this year, the Group will have drawn and available facilities totalling €126 million, with core debt at €118 million. This will deliver a Net Debt to EBITDA ratio of approximately 3 times, thereby achieving the Group's stated strategic leverage target.

On its full implementation, the Group will have an appropriate and stable capital structure and debt amortisation profile, leaving it well positioned to invest in the digital arena and in its core print titles, whilst restoring the Group's financial stability. The restructuring arrangements will also provide the Group with the funding required to deliver further and necessary cost reductions which, when implemented, together with the effect of the previously implemented initiatives, are targeted to deliver a full year benefit to the Group of c.€26 million. See note 1 for further details on the bank deal.

- PERFORMANCE OVERVIEW -

The Group reported an Operating Profit before Exceptionals for 2012 of €59.7 million, which was €15.8 million lower than 2011. Group Revenue fell by 3.3% (2.1% in constant currency), with reductions of 2.3% in the Island of Ireland and 5.0% in South Africa.Economic challenges and weak consumer confidence in both the Island of Ireland and South Africa continue to negatively impact the Group's top line performance. Group advertising revenue was down 5.7% (3.8% in constant currency), while circulation revenue was down 3.8% (3.0% in constant currency).

During 2012, INM continued to successfully deliver operating cost reductions, with a €2.5 million reduction, despite significant inflationary pressures in South Africa in excess of 5.7% and the year-on-year impact of the acquisition IHD and the launch of GrabOne. Excluding IHD and GrabOne, year-on-year costs reduced by €9.2m. Cost savings initiatives included the closure of the Group's former Head Office in Citywest and consolidation into the Talbot Street city centre offices in Dublin where the Irish operations are based. The Group also closed its London office at the end of June, whilst the position of COO, previously held by the Group's current CEO, has not been back-filled. During the year, the Group successfully completed a voluntary redundancy scheme in the Sunday World. In Belfast, INM also successfully repositioned the Belfast Telegraph to a morning edition, which resulted in the closure of the dayshift in the Belfast printing plant, delivering significant cost savings.

INM is committed to producing and delivering its market-leading products more efficiently each and every day. However, this relentless focus on efficiency needs to be balanced with appropriate investment in editorial, marketing and digital to underpin the Group's market-leading franchises and to grow new revenue streams in an increasingly competitive media landscape. In particular, INM continues to develop an increasingly diverse revenue stream through enhanced focus and investment in digital.

Commenting on these results, Vincent Crowley, Group Chief Executive Officer, said:

"Trading in 2012 continued to reflect the poor economic conditions experienced in recent years in the Island of Ireland, while the South African economy experienced low consumer and business confidence. However, even in this very difficult trading environment, INM delivered an Operating Profit of €59.7 million and reduced operating costs by €2.5 million, despite significant cost inflation and an operating margin of 11.1%. Excluding IHD and GrabOne, year-on-year costs reduced by €9.2 million.

"The new bank deal announced this morning and the sale of our South African business, announced earlier this month, will put the Group on a secure financial footing, following the completion of all the stages of the debt restructuring. The resultant sustainable debt level, an ability to implement a restructuring of the business and a further repositioning of the Group to embrace opportunities in the digital arena and to continue to invest in our core titles will, in combination, give greater potential for an increase in shareholder value.

"Forecasting in these tough and challenging conditions is very difficult and visibility remains short. To date in 2013, we have seen total revenues down 10.4% or 5.8% in constant currency on the prior year. However, cost reduction initiatives implemented to date and planned, are targeted to assist in mitigating much of this revenue shortfall.

"INM has a strong portfolio of market-leading and profitable titles and a growing digital revenue stream. Despite unprecedented operating conditions and an ever-competitive media landscape, the Group's franchises continue to be resilient, relevant and profitable. INM has a well-invested and increasingly efficient asset base, with no significant medium-term capital expenditure requirements."

- 2012 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 €354.9 million was down 2.3% on 2011 in what continues to be a very challenging trading environment.

Weak economic conditions across the Island of Ireland and the impact of continued uncertainty across the Eurozone resulted in a €7.4 million reduction in operating profit during 2012. Despite some significant cost increases in 2012, including an increase in the IAS 19 pension charge, a negative foreign exchange impact, the full year impact of the acquisition of IHD in 2011 and a full year roll-out of GrabOne in 2012, continued cost vigilance resulted in a €1.1 million year-on-year reduction in costs. Excluding IHD and GrabOne, year-on-year costs reduced by €9.2 million.

The Group's market-leading publishing brands (Irish Independent, Sunday Independent, The Herald, Sunday World, Belfast Telegraph, Sunday Life and 13 regional titles) ensured the Group was in the best possible position to benefit from media spend but, reflecting the tough market conditions, these titles experienced a 11.0% reduction in publishing advertising revenue. Given the market backdrop, the only advertising category to show growth on 2011 was Property, albeit off a very low base. The largest year-on-year declines were experienced in the Run of Press, Magazines, Notices and Recruitment categories.

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 revenues for the full year, in constant currency, down 3.5% on 2011.

Strong Portfolio of Market-Leading Titles

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 123,981 copies (49.2% share of quality market) and an average daily readership of 521,000 readers2 (up 44,000 readers on 2011), it continues to dominate the quality morning market, with a readership in excess of the combined readership of its two closest competitors. Its value in the marketplace was further underlined in 2012 through product investment, which included the redesign of Day & Night, the expansion of Health & Living and the launch of the glossy Fit magazine. In December 2012, it successfully moved to a compact only format reflecting changing consumer demand.

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 237,185 copies (63% share of quality market). It continues to be the Republic of Ireland's most-read newspaper and, in attracting 905,000 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 continued to show the strength of its brand by recording an ABC1 figure of 58,826 copies and attracting a very strong 250,000 daily readers2 in 2012 (up 6.8% on 2011), strengthening its position as Dublin's most-read newspaper. Since year end, the Group successfully introduced the rebranded, 'The Herald' to the morning market country-wide and updating the greater Dublin area with a City Edition at lunch time. This had the effect of increasing sales and reducing distribution costs by merging the first edition with the national distribution network.

The Sunday World continues to be Ireland's largest-selling and most-read tabloid newspaper, delivering an ABC1 of 217,141 copies and attracting 801,000 readers2 every Sunday. Despite the introduction of the Sun on Sunday during 2012, the Sunday World holds 57% market share and continues to have a position of absolute leadership in the popular market every Sunday, making it an essential component of any media schedule.

The Belfast Telegraph Group remains the dominant player in the Northern Ireland newspaper market, with the Belfast Telegraph the No. 1 quality newspaper, recording an ABC1 (Mon - Sat) of 49,530 copies, whilst Sunday Life achieved an ABC1 of 47,584 copies. The move of the Belfast Telegraph fully into the morning market during April 2012 has positioned the paper well for the future, increasing its shelf-life for both advertisers and readers.

The trading conditions experienced by the Group's twelve paid-for and one free weekly regional titles (in counties Cork, Kerry, Dublin, Louth, Wexford, Wicklow and Sligo) continued to be more demanding than that of the Group's national business due to the ongoing difficult economic backdrop prevalent in regional Ireland. Despite these difficult conditions, the Group's titles continue to show their resilience, with the Group's regional operations continuing to be profitable. The Group introduced a number of very successful initiatives in 2012 including the relaunch of the Drogheda Independent at a €1 cover price in August 2012, resulting in a significant circulation uplift. In addition, publication dates of titles in both Sligo and Wexford have been brought forward by one day which has delivered circulation improvements.

metro herald, the Group's joint venture publication with the Irish Times and DMGT, is Dublin's only daily free newspaper. This product progressed well in 2012, with an ABC1 verified daily distribution of 56,407 copies. The Group's other joint venture publication, the Irish Daily Star, delivered another solid result in what remains a very challenging daily tabloid market, recording an ABC1 of 70,961 copies. As of January 2013, INM has assumed executive management responsibility, under the direction of the joint venture board, for the business and the future of the title has been secured.

Digital Growth & Innovation

Digital revenues showed significant year-on-year growth of 16.9%. The Independent Digital suite of publishing platforms, which includes the market-leading independent.ie and more than 15 local news brands/titles, continued to make excellent progress during 2012, with its average monthly page impressions and unique users showing year-on-year growth of 37% and 61%, to 44.4 million and 4.8 million respectively. independent.ie continued its market-leading performance, by continuing to drive user engagement and innovation and in improving advertising return with a number of first-to-market ad formats across a variety of publishing platforms. Downloads of the Independent Digital suite of specific mobile applications continues to grow, amounting to over 259,000 at the end of December 2012, with independent.ie accounting for 96% of the total. In June 2012, independent.ie was ranked as Ireland's number 1 read online news publishing site according to comScore Media Metrix Newspaper Category report and has held that position every month since then.

During 2012, the Group developed and implemented a new publishing platform that delivers significant new functionality, and in early 2013 successfully launched a redesign of its suite of editorial websites. Showcasing a cleaner look and feel, improved navigation, a much improved video section, live blogs, up-to-the-minute reports and coverage of high profile news, business and sporting events are just some of the key features of our new design.

The Group also owns Northern Ireland's largest online newspaper portal, with its award-winning website, BelfastTelegraph.co.uk, and the leading classified portals, PropertyNews.com, NIjobfinder.co.uk, and NIcarfinder.co.uk, with an average of 2.7 million monthly unique users and 29.9 million monthly page impressions throughout 2012, an increase of 52.8% and 2.0% respectively on 2011. INM is the only publisher in Northern Ireland to provide content on four separate platforms: print; browser; tablet and mobile. Ongoing development has seen all three classifieds sites re-launched with a host of new features and functionality, with all sites now available in mobile format, improving access and resulting in improved audiences.

GrabOne.ie, the Group's e-tailing brand, has performed very well in its first full year of trading and has become the largest Irish-owned online deals business, with a presence in seven distinct geographic markets: Dublin, Cork, Belfast, Limerick/Shannon, South East, Kerry and Galway. Two new offerings were launched in 2012 - GrabOne Escapes, which focuses on accommodation and holiday/leisure activities and GrabOne Store, which focuses on product offerings. The Group's joint venture operation, CarsIreland.ie, exceeded expectations in 2012 and provides the Group with a strong and growing presence in the fast growing online motors classified space. Towards the end of the year the Group increased its shareholding to 50%.

Newspread, the largest wholesale distributor of Irish and UK newspapers, magazines and periodicals on the Island of Ireland, delivered a very strong result in 2012, despite the challenging distribution market within which it operates. Using its extensive retail network, this business continues to successfully identify and develop new business lines as it successfully diversifies its revenue base.

Continuing Development of Education Business

Independent Colleges successfully expanded its student offering further with new Business and Accountancy programmes including Diplomas and Advanced Diplomas in Marketing, Business Studies, Commercial Management and an Association of Chartered Certified Accountants (ACCA) Diploma in Accounting and Business. IHD, which was purchased in late 2011 and subsequently relocated to the Independent Colleges premises on Dawson Street in Dublin, is performing well ahead of budget and targets set for it at the time of its acquisition.

1 ABC July to December 2012

2 JNRS 2012

SOUTH AFRICA

The South African division reported revenue of €184.8 million, which was down 5.0% on 2011 (down 0.7% in constant currency terms). The revenue contraction resulted from tough trading conditions in a number of consumer led sectors and the impact of labour unrest during the year. As the global recession continued, it had a negative impact on both consumer and business confidence, which are at historic lows.

Operating profit of €27.0 million delivered an operating margin of 14.6%. On a constant currency basis, operating costs increased by 4.1%, a good performance given inflationary cost increases in excess of 5.7%, which were experienced across the market. INM continued to aggressively manage costs, mitigating some of the impact of inflationary increases. Towards the end of 2012 the Gauteng region started the process of outsourcing its printing to a new printer and this has now been successfully completed.

Advertising revenues, in constant currency, were up 1.4% on 2011. The direct retail and features advertising categories were up on 2011, with classified (particularly recruitment, property and legal notices) and National/Brand advertising volumes remaining under pressure.

Commercial printing revenues were down 16.9%, mainly due to the outsourcing of printing in Gauteng and Cape Town.

Condé Nast Independent Magazines improved operating profits in 2012, with both advertising and circulation revenues showing year-on-year growth. Three new title extensions were launched during the year - Glamour Hair, GQ Style and House & Garden Gourmet. The GQ and Glamour websites also showed good growth.

Circulation

Circulation revenues were down 1.8% on the prior year, with cover price increases being offset by declining sales, particularly in the mature titles. The Group's Zulu language newspaper, Isolezwe, continues to record impressive growth, expanding its penetration in this significant market sector. For the weekday edition, copy sales (ABC) averaged 111,385 in 2012 - up 3.5% on 2011. For the Sunday edition, Isolezwe NgeSonto, copy sales (ABC) averaged 86,855, up 8.5% over the prior year, and the new Saturday edition, Isolezwe ngoMgqibelo, achieved an impressive copy sales (ABC) average of 73,114 in its first full year of sale. In tandem with this copy growth, readership numbers continue to grow - now 867,000 for the daily, 784,000 for the Sunday edition and 438,000 for the Saturday edition. The first half of 2012 saw the innovative re-launch of the Cape Argus in compact format and the successful extension of The Star newspaper's reach by adding a compact edition aimed at the emerging and commuter markets surrounding central Johannesburg. The Cape Argus has also moved to producing morning and afternoon editions.

Digital Growth

Digital revenues showed significant year-on-year growth in excess of 40% (in constant currency), supported by rapid audience growth coupled with aggressive sales, inventory and yield management. The digital business also benefited from the addition of new revenues through the introduction of digital advertorial content and aggressively managed network campaigns on the company's websites.

- 2012 FINANCIAL INFORMATION -

Share of Results of Associates and Joint Ventures

The Group's Associates and Joint Ventures mainly comprise of its 29.0% shareholding in APN, its 50.0% shareholding in the Irish Daily Star, its 50% shareholding in CarsIreland.ie and its 33.3% shareholding in metro herald.

APN reported a revenue decline of 13.4% to A$928.6 million for the period. EBIT was down 28.5% to A$122.5 million and Net Profit After Tax (NPAT) before exceptional items was down 30.4% to A$54.4 million - our share of this NPAT before exceptional items was €12.4 million. APN incurred a non-cash impairment charge of A$638 million, associated with APN's New Zealand and Australian Regional publishing assets. APN continues to make operational improvements within its publishing businesses in New Zealand and Australia.

Paul Connolly was appointed to the Board of APN on 18 October 2012. On 18 February 2013 the Chairman Peter Hunt, CEO Brett Chenoweth and three non-executive Directors, Melinda Conrad, John Harvey and John Maasland, resigned as Directors. On 19 February 2013 Peter Cosgrove was appointed Chairman of the Board. An executive recruitment company has been appointed to perform an extensive search for a new CEO and additional board Directors. Good progress is being made in identifying suitable candidates.

APN paid an interim dividend of A$0.015 per share on 26 September 2012. APN will not be declaring a final dividend for 2012.

Exceptionals

The Group recorded a Net Exceptional Charge of €273.7 million in 2012, the vast majority of which is non-cash. The charge includes a non-cash impairment charge of €117.8 million, which mainly relates to non-cash impairment charges of €50.4 million and €66.8 million arising respectively on intangible assets and property, plant and equipment in the Island of Ireland, which arose due to the continued economic downturn. In addition, an amount of €15.8 million was incurred in relation to restructuring charges across the Group's operations. INM also incurred an exceptional charge of €150.9 million in relation to its associates and joint ventures. This mainly relates to a non-cash impairment charge of €135.8 million arising in APN, as a result of impairments in APN's New Zealand and Australian regional mastheads. These impairment charges are a result of the continuing economic weakness facing the New Zealand and Australian regional economies, as well as the structural changes continuing to impact those advertising markets. A disposal gain of €17.8 million arose on the disposal by APN of 50% of its interest in APN Outdoor Group Pty Limited. INM also incurred a charge of €24.0 million in relation to a goodwill write-off on the Group's investment in APN. An exceptional tax credit of €19.4 million arose due to a tax credit on the impairment of property, plant and equipment.

Deleveraging & Finance Charges

During the year, the Group reduced its Net Debt by €4.4 million as it continued to effectively manage its cash and working capital commitments. In 2012 the Group's net finance charge increased by €1.8 million (5.4%), which was mainly due to increased PIK interest on our Bank Facility and lower interest received in South Africa.

Taxation

The total tax credit in 2012 was €10.0 million, compared to a credit of €22.6 million in 2011. The main reason for the difference was due to higher exceptional tax credits booked in 2011.

Pension

At the end of 2012, the Group's pension deficit was €190.2 million, of which €21.8 million related to a Medical Aid Scheme in South Africa. The Group's financial restructuring, announced earlier today, includes a stage which involves the restructuring of the Group's four ROI defined benefit pension schemes, in agreement with the Trustees of the schemes. This will involve Section 50 submissions to the Irish Pensions Board.

Dividends

The Directors do not propose recommending a final dividend for 2012.

- INTERIM MANAGEMENT STATEMENT -

In accordance with the Transparency Regulations, this Interim Management Statement is an update on INM's trading performance for the first 16 weeks of 2013 (from 1 January 2013 to 19 April 2013).

The year-on-year performance for the 16 weeks to 19 April 2013 is as follows:

·; Total Group Revenues declined by 10.4% (-5.8% in constant currency);

·; Total Advertising Revenues declined by 13.4% (-5.6% in constant currency);

·; Total Circulation Revenues declined by 8.8% (-5.0% in constant currency); and

·; Operating Cost reduction of 11.2% (6.5% in constant currency).

Trading conditions since year end have continued to be very challenging with most categories of advertising continuing to experience very tough market conditions.

Despite revenue reductions to date, the impact on profitability has been largely mitigated by newsprint price reductions and other cost reductions across the business. As a result, total costs in this 16 week period are lower by 11.2%.

Material events occurring in the period are the agreement to dispose of Independent News & Media South Africa for in aggregate R2 billion (approximately €167 million) and to apply the net proceeds to reduce debt and the new bank deal. Further detail on these events and on their impact on the financial position of the Group are addressed in the respective announcements (dated 5 April and 26 April 2013).

- ENDS -

For further information, contact:

INDEPENDENT NEWS & MEDIA PLC

GROUP INCOME STATEMENT

* Note 4

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.

GROUP CASH FLOW STATEMENT

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.

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 during the 12 months from the date of their approval, the time period that the Directors have considered in evaluating the appropriateness of the going concern basis (the period of assessment).

The Group's Bank Debt Facilities (the 'Bank Facilities'), which were entered into in 2009, based upon a 4½ year maturity to May 2014, contain certain covenant tests which have to be assessed quarterly, including Net Debt to EBITDA, EBITDA to Net Interest and Cash Flow Cover. Amounts of €438.3m in respect of these Bank Facilities are included within borrowings as at 31 December 2012 (note 12). Failure of a covenant test would render the Bank 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.

Amendments to the Bank Facilities during 2012 provided for financial covenant headroom and the rescheduling of €41m of the December 2012 and €21m of the June 2013 scheduled repayments. The Group also received a deferral to 1 February 2013 of the requirement to test its covenants at 31 December 2012. The cost of the covenant amendments was €1.7m. Each of the Banks agreed to these amendments to the Bank Facilities. The Group was compliant with its covenants following the amendments to terms during 2012.

The Directors have considered the detailed review undertaken by the Group of its anticipated future cash flows during the period of assessment. These detailed, bottom-up financial forecasts have been prepared by, and reviewed with, each of the Group's major business units. The review considered the still-uncertain economic outlook and the weakness in advertising revenues which the Group continues to experience. The forecasts are based on key assumptions, reflecting information available at the time of approval of the financial information.

The forecasts show that the Group will not comply, during 2013, with certain covenant tests contained within its Bank Facilities under the existing Master Facilities Agreement. There are also scheduled repayments of €34m and €27m due on 30 September 2013 and 31 December 2013 respectively. The Group's forecasts indicate that it will not have sufficient cash available to meet these repayment obligations.

Failure of a covenant test or failure to meet a scheduled repayment would constitute an event of default under the existing Master Facilities Agreement and would give the Banks the right, but not the obligation, to demand immediate repayment of all amounts due to them if an amendment or waiver is not granted by the Banks in advance. If such a right was exercised, the Group would need to find alternative financing sufficient to fund the full repayment of the existing Bank Facilities. Having explored extensively other financing and equity-based options, the Directors believe there is no realistic prospect of such funds being available.

On 26 April 2013, it was announced that the Group had entered into a formal agreement ('Lock-up Agreement) with its Banks to restructure its Bank Facilities (the 'Restructuring') over a number of stages, to be completed by no later than 31 December 2013.

Lock-up Agreement

The Lock-up Agreement includes a standstill under which the Group's Banks agree not to take any action to enforce any claim for payment against the Group until:

·; the documentation of the Restructuring has been finalised and entered into by all relevant parties; and

·; the first stage of the Restructuring becomes effective, meaning that the disposal of Independent News and Media (South Africa) (Pty) Ltd ('INMSA') has completed and the proceeds have been applied to reduce the Bank Facilities;

subject to a Completion Long-Stop Date of 15 July 2013, or such later date agreed between the Group and Lloyds TSB Bank plc acting as agent for the Banks, up to 31 October 2013.

NOTES TO THE FINANCIAL INFORMATION (continued)

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

Basis of Preparation and Going Concern (continued)

Lock-up Agreement (continued)

The Lock-up Agreement may be terminated in a number of circumstances, some of which are dependent on third parties. The principal circumstances of note are as follows:

·; the disposal of INMSA does not complete in line with the agreed SPA, for whatever reason;

·; failure by the Group to obtain irrevocable undertakings from shareholders representing a significant percentage of the existing issued share capital to vote in favour of the INMSA Disposal and Restructuring resolutions;

·; failure to obtain confirmation in writing from the Irish Takeover Panel, in relation to the Equitisation (as outlined below):

o that there is no requirement for the Group's Banks to make a mandatory bid for the shares in the Company; and

o that it will provide a waiver of any obligation to make a mandatory offer for shares in the Company, such waiver being either unconditional or conditional upon the approval of independent shareholders in the Company in general meeting.

·; a pension restructuring plan is submitted to the Irish Pensions Board which is not within agreed parameters;

·; failure to complete and distribute all relevant documentation to shareholders, to hold an EGM and to secure requisite shareholder approval within agreed timelines; and

·; the occurrence of a material adverse change as defined in the Lock-up Agreement.

Disposal of Independent News & Media (South Africa)

On 5 April 2013, it was announced that the Group had entered into a binding agreement for the disposal of its interest in INMSA, for a total gross consideration of R2 billion (approximately €167m) before expenses (the 'INMSA Disposal'). Completion of the INMSA Disposal is subject to a number of conditions some of which are dependent on third parties. The principal conditions are:

·; the Company's shareholders have passed all resolutions as may be required to approve and implement the sale by 30 June 2013;

·; approval of the INMSA Disposal by the exchange control authorities of the South African Reserve Bank by 30 May 2013; and

·; approval of the INMSA Disposal by the South African Competition Authorities within six months following the date of filing of the merger notification with them.

First Stage Debt Restructuring

The First Stage Debt Restructuring comprising the amendment and restatement of the existing Bank Facilities becomes effective when the net proceeds from the INMSA Disposal are used to repay an equivalent amount of the existing Bank Facilities. The remaining Bank Facilities will be reorganised into four facilities, with amendments to the interest terms, covenants and scheduled repayments. The four new facilities are: Facility A (€150m); Facility B (€50m); Facility C (expected to be approximately €116m) and additional facilities and a revolving credit facility (approximately €8m), totalling approximately €324m.

The Directors are satisfied that in all reasonable circumstances and, in the event that only the First Stage Debt Restructuring is implemented, the Group will have sufficient liquidity and funding for its present requirements and that the Group will meet the covenants contained within the amended Bank Facilities, during the period of assessment.

Achievement of the First Stage Debt Restructuring is dependent on two uncertain events being:

·; the completion of the INMSA Disposal and the application of the disposal proceeds to the Bank Facilities; and

·; the agreement of an amended Master Facilities Agreement on foot of the Lock-up Agreement.

NOTES TO THE FINANCIAL INFORMATION (continued)

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

Basis of Preparation and Going Concern (continued)

First Stage Debt Restructuring (continued)

The Directors have considered all of the termination events in the Lock-up Agreement and all of the conditions precedent in the INMSA Disposal sale agreement and have:

·; taken legal advice;

·; taken advice from other professional advisors; and

·; had discussions with certain large shareholders and have received irrevocable undertakings from shareholders representing a significant percentage of the existing issued share capital to vote in favour of the INMSA Disposal.

Having considered the uncertainties, advice received and the mitigating factors, including discussions with major shareholders, the Directors are satisfied that the risks and uncertainties in relation to the completion of the First Stage Debt Restructuring have been satisfactorily addressed.

Pension Restructuring

On implementation of the First Stage Debt Restructuring, the Group will acquire the right to exercise two options (the 'Options'), provided that in each case certain conditions are satisfied. These Options can only be exercised if (i) certain share capital resolutions are approved by shareholders and (ii) a submission is made in accordance with Section 50 of the Pensions Act 1990, by the trustees of INM's four ROI defined benefit pension schemes of funding proposals in compliance with the agreed pension parameters as set out in the Lock-up Agreement ('Pension Restructuring Proposals'). The two options are a Capital Raise Option and a Non-Capital Raise Option as outlined below.

There can be no certainty that such a Section 50 submission can be made in line with the deadline issued by the Irish Pensions Board (currently 30 June 2013).

Final Stage Debt Restructuring

The Final Stage Debt Restructuring comprises completion of the exercise of the Capital Raise Option or the Non-Capital Raise alternative and the further amendments and alterations to the terms of the existing Master Facilities Agreement, on satisfaction of the relevant Option.

Exercise of each of the Capital Raise Option and the Non-Capital Raise Option is conditional upon a submission being made in accordance with Section 50 of the Pensions Act 1990 in line with the deadline issued by the Irish Pensions Board, by the trustees of INM's four ROI defined benefit pension schemes of the Pension Restructuring Proposals. Exercise of the Non-Capital Raise Option is further conditional upon such proposals being approved by the Irish Pensions Board.

The key terms of the two options are described below:

1. Capital Raise Option - the Group may exercise the Capital Raise Option to effect a capital raise of at least €40m (net of expenses). The net proceeds will be used to repay an equivalent amount of the Bank Facilities. In return for this repayment and €10m of equity value in the Company, subject to a minimum of 11% of the enlarged share capital of the Company, the Banks will reduce the amount outstanding on the Bank Facilities. The Group would see a reduction in Facility A and the cancellation of Facilities B and C (save in respect of €10m representing the amount of the INMSA Disposal proceeds to be held in escrow), resulting in total Group indebtedness of €118m (plus other facilities and credit lines of €8m), excluding €10m held in escrow. Under the Capital Raise Option, the facilities would have a five year term, maturing on 1 April 2018. There can be no certainty, however, that a capital raise will be possible on satisfactory terms or at all.

2. Non-Capital Raise Option ('Equitisation') - the Company may, following approval of the Pension Restructuring proposals by the Irish Pensions Board, exercise the Non-Capital Raise Option. The Banks will be issued with new ordinary shares representing 70% of the enlarged issued share capital as consideration for the cancellation of one of the facilities (Facility C approximately €116m). In this situation, the debt facilities available to the Group would total approximately €208m, with a further €10m relating to funds held in escrow (as referred to above). These facilities would have a three year term, maturing on 1 April 2016. Following approval of the Pension Restructuring proposals by the Irish Pensions Board and if the Capital Raise Option has not occurred by 31 December 2013, then the Non-Capital Raise Option automatically exercises.

NOTES TO THE FINANCIAL INFORMATION (continued)

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

Basis of Preparation and Going Concern (continued)

Final Stage Debt Restructuring (continued)

As outlined above, the Group may be required to receive shareholder support to approve a 'whitewash', i.e. that there is no requirement for the Banks to make a mandatory bid for the shares in the Company arising from the Equitisation.

If the First Stage Debt Restructuring does not occur (if the INMSA Disposal does not complete or if the disposal proceeds are not applied against the existing Bank Facilities and/or if the Lock-Up Agreement is terminated by the Banks and/or if the Lock-up Agreement does not lead to the agreement of an amended Master Facilities Agreement), the forbearance arrangements would cease, and the proposed new debt facilities would not be made available to the Group. Additionally, the conditional options discussed above, which enable the Group to progress to the Final Stage Debt Restructuring, would not be available to the Group.

If the Final Stage Debt Restructuring does not occur (if, for example, the relevant conditions to exercise the Options have not been satisfied), then the proposed debt facilities would remain as those arising on completion of the First Stage Debt Restructuring. In this scenario, all facilities would mature on 1 April 2016. In the opinion of the Directors, further negotiations with the Group's Banks would then be needed as this would not be a sustainable level of debt for the Group over the medium to long term, but the Group would have sufficient liquidity and funding for its present requirements, during the period of assessment.

Conclusion

The Group's Banks have been supportive throughout the entire process as evidenced by their recent amendments to the Bank Facilities and their agreement to implement the Restructuring, including a standstill to allow time for the necessary pre-conditions to be fulfilled. The achievement of the First Stage Debt Restructuring is in the interests of the Banks as it involves the repayment of approximately €158m, including €10m in escrow.

The Directors have therefore concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. On the basis of all of the foregoing, the Directors consider it appropriate to prepare the financial information on the going concern basis.

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 2012 will be annexed to the Company's annual return for 2012. The annual report and accounts will be approved by the Board of Directors by 30 April 2013. 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 2011 has been annexed to the Company's annual return for 2011 to the Companies Registration Office.

The 2012 statutory accounts of the Company will be available on the Company's website inmplc.com as of 30 April 2013. Consistent with prior years, the full financial statements for the year ended 31 December 2012 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 2012 in accordance with EU adopted International Financial Reporting Standards (IFRS) and IFRIC interpretations and with those parts of the Companies Acts, 1963 to 2012, applicable to companies reporting under IFRS. This financial information comprises the Group Balance Sheets as of 31 December 2012 and 31 December 2011 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 2012 and 31 December 2011 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

NOTES TO THE FINANCIAL INFORMATION (continued)

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

General Information (continued)

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 2011 and are described in those financial statements on pages 51 to 61.

The following interpretations or amended standards are mandatory for the first time for the financial year beginning 1 January 2012, and are either not relevant to the Group or they do not have any significant impact on this financial information:

·; IFRS 7 Financial Instruments: Disclosures (Amendment) Transfer of Financial Assets;

·; IFRS 1 (Amended) First-time Adoption of International Financial Reporting Standards; and

·; IAS 12 Income Taxes (Amendment) Deferred Tax.

In certain instances, the comparative notes to the financial information have been restated for consistency of classifications adopted in 2012. These reclassifications were made in order to provide more relevant information to the users of the financial statements. In 2012, these restatements relate to the reclassification of €6.6m of exceptional items relating to associate and joint venture undertakings from exceptional items to share of associates and joint ventures exceptional items. This reclassification has resulted in a restatement to the comparative note disclosures in respect of each of the following notes: exceptional items, taxation, segmental reporting and (loss)/earnings per share.

2. Risks and Uncertainties

The principal risks and uncertainties facing the Group were detailed in the Directors' Report and in note 32 to the 2011 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 Directors have considered the detailed review undertaken by the Group of its anticipated future cash flows during the period of assessment. These detailed, bottom-up financial forecasts have been prepared by, and reviewed with, each of the Group's major business units. The review considered the still-uncertain economic outlook and the weakness in advertising revenues which the Group continues to experience. The forecasts are based on key assumptions, reflecting information available at the time of approval of the Financial Statements.

The forecasts show that the Group will not comply, during 2013, with certain covenant tests contained within its Bank Facilities under the existing Master Facilities Agreement. There are also scheduled repayments of €34m and €27m due on 30 September 2013 and 31 December 2013 respectively. The Group's forecasts indicate that it will not have sufficient cash available to meet these repayment obligations.

On 26 April 2013 it was announced that the Group had entered into a formal agreement ('Lock-up Agreement') with its Banks to restructure its Bank Facilities (the 'Restructuring') over a number of stages, to be completed by no later than 31 December 2013.

The Lock-up Agreement includes a standstill under which the Group's Banks agree not to take any action to enforce any claim for payment against the Group until:

·; the documentation of the Restructuring has been finalised and entered into by all relevant parties; and

·; the first stage of the Restructuring becomes effective, meaning that the disposal of Independent News and Media (South Africa) (Pty) Limited ('INMSA') has completed and the proceeds have been applied to reduce the Bank Facilities.

The First Stage Debt Restructuring comprising the amendment and restatement of the existing Bank Facilities becomes effective when the net proceeds from the INMSA Disposal are used to repay an equivalent amount of the existing Bank Facilities. The remaining Bank Facilities will be reorganised into four facilities, with amendments to the interest terms, covenants and scheduled repayments. The four new facilities are: A (€150m);

NOTES TO THE FINANCIAL INFORMATION (continued)

2. Risks and Uncertainties (continued)

Liquidity (continued)

B (€50m); C (expected to be approximately €116m) and additional facilities and a revolving credit facility (approximately €8m), totalling approximately €324m.

The Directors are satisfied that in all reasonable circumstances and, in the event that only the First Stage Debt Restructuring is implemented, the Group will have sufficient liquidity and funding for its present requirements during the period of assessment. See note 1 for details of the Final Stage Debt Restructuring.

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 (with the exception of significant associates which are separately considered) and taxation are reviewed and considered by the CODM at a Group level only.

The Group's subsidiaries operate in two geographical areas: Island of Ireland and South Africa. The components of the Group that are considered by the CODM, whose operating results are regularly reviewed by the Board of Directors to make decisions about the allocation of resources, and in performance assessment are contained in the table on the following page.

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.

* 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 2012 were €717.8m (2011: €754.5m) and APN's operating profit before exceptional items for the year ended 31 December 2012 was €89.6m (2011: €121.0m).

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.

(i) 2012

Primarily relates to the following:

(a) Non-cash impairment charges of €117.8m as follows:

1. €50.4m due to non-cash impairment charge on intangible assets in the Island of Ireland. This impairment is as a result of a number of factors, including the continued 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 advertising markets in the Island of Ireland;

2. €66.8m due to non-cash impairment charges on certain property, plant and equipment in the Island of Ireland. This impairment is as a result of the reduced profitability arising in the Group's printing operations which has arisen due to the economic downturn; and

3. €0.6m non-cash impairment charge on available-for-sale financial asset investments.

(b) A net charge of €1.1m arising on other items.

2011

Primarily relates to the following:

(a) Non-cash impairment charges of €94.4m 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 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; and

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

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

(c) A net gain of €2.2m arising on other items.

(ii) 2012

Primarily relates to the following:

(a) Headcount restructuring charges of €16.6m across the Group;

(b) Onerous contracts of €0.6m in respect of property and other assets across the Group; and

(c) A credit of €1.4m in respect of the Group's retirement benefit obligations arising on a curtailment gain of €0.5m in South Africa and a curtailment gain of €0.9m in the Island of Ireland.

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 in that business which are now onerous; and

NOTES TO THE FINANCIAL INFORMATION (continued)

4. Exceptional Items (continued)

(ii) 2011 (continued)

 (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.

(iii) 2012

Relates to costs incurred during the period in relation to the Group's renegotiation of its financing arrangements. These costs primarily comprise of (i) professional fees incurred in respect of professional advice received by the Group during the renegotiation process and (ii) professional fees paid by the Group on behalf of and under the instruction of the Group's Banks (as the Group is obligated by the Banks to cover costs incurred by their legal and financial advisors for the duration of the refinancing negotiations).

(iv) 2012

The exceptional finance costs of €1.7m incurred relate to amendment fees payable to the Group's Banks as part of the renegotiation of financing arrangements during 2012.

(v) 2012

The net charge of €150.9m includes a €135.8m non-cash impairment charge and a €17.8m disposal gain arising in APN News & Media Limited (APN). The impairment charge arises on APN's New Zealand and Australian regional mastheads. The impairment charges are a result of the continuing economic weakness facing the New Zealand and Australian regional economies, as well as the structural changes continuing to impact these advertising markets. The disposal gain arose on the disposal by APN of 50% of its interest in APN Outdoor Group Pty Limited. The charge also includes a €5.4m non-cash deemed disposal loss and a €24.0m goodwill write-off on the Group's investment in APN. The remaining net cost of €3.5m mainly relates to restructuring costs and asset writedowns in APN.

2011

Mainly relates to a non-cash impairment charge of €25.7m 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. The charge also includes a €3.9m non-cash deemed disposal loss on the Group's investment in APN and a €2.0m non-cash impairment charge on investments in and loans to associates and joint ventures. The remaining net cost of €4.5m mainly relates to restructuring costs and asset writedowns in APN and in the Star in Ireland.

5. Equity Interest in APN and Assessment of Carrying Value

INM has a 29.0% shareholding in APN as at 31 December 2012 (31 December 2011: 30.4%). INM accounts for APN as an associate and INM's share of APN's Net Profit is reported in INM's Income Statement within 'Share of Results of Associates and Joint Ventures'. As described in note 4, the Group booked a €24.0m goodwill impairment on the Group's investment in APN and this was recognised as part of the Group's interim results.

Value in Use Assessment of Investment in APN

As at 31 December 2012 INM carried its investment in APN on its Balance Sheet at an amount of €115.3m (after the impairment charge of €24.0m which was recognised as part of the interim results) or A$0.76 per APN share held. However, at 31 December 2012 the APN share price as listed on the Australian Stock Exchange was A$0.25 per share (value of INM stake was approx. €37.7m at 31 December 2012 and increased to approx. €56.9m at 25 April 2013).

As APN is an associate of INM, under IFRS the Group is required to compare the carrying value of its investment in APN to the recoverable amount of its investment in APN. Under IFRS the recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. In this case, as the value in use of INM's investment in APN is higher than the fair value less costs to sell of APN, INM calculated the value in use of its investment in APN in accordance with the accounting standards. This calculation showed that the value in use of INM's investment in APN was greater than its carrying value of A$0.76 per APN share and hence INM's investment in APN is not impaired.

NOTES TO THE FINANCIAL INFORMATION (continued)

5. Equity Interest in APN and Assessment of Carrying Value (continued)

Impairment Charges Recorded by APN/Sensitivity Analysis

See note 4 for details of exceptional items booked in relation to APN. As disclosed by APN, the value in use calculations are highly sensitive to changes in certain key assumptions. All the APN cash generating units ('CGUs'), except for the New Zealand Media and Australian Regional division CGUs, have sufficient headroom such that reasonable changes to key assumptions would not give rise to an impairment. As explained in note 4, INM recognised a non-cash impairment charge of €135.8m in relation to APN's New Zealand and Australian regional CGUs (being INM's share of the impairment charge recorded by APN in respect of these CGUs).

For the New Zealand Media CGU a 1% increase in the discount rate used would result in an increase of €3.2m in the impairment charge recognised by INM. A 1% decrease in long-term growth rates would result in an increase of €3.5m in the impairment charge recognised by INM. If forecasted cash flows were to decrease by 10% in the New Zealand Media CGU, it would result in an increase of €5.1m in the impairment charge recognised by INM. For the Australian regional CGU a 1% increase in the discount rate used would result in an increase of €3.0m in the impairment charge recognised by INM. A 1% decrease in long-term growth rates would result in an increase of €2.6m in the impairment charge recognised by INM. If forecasted cash flows were to decrease by 10% in the Australian regional CGU, it would result in an increase of €3.5m in the impairment charge recognised by INM.

6. Net Finance Costs

7. Taxation

The total tax charge for the year is different from the standard rate of Corporation Tax in Ireland of 12.5% (2011: 12.5%). The differences are explained below:

NOTES TO THE FINANCIAL INFORMATION (continued)

7. Taxation (continued)

In 2012, the €18.2m deferred tax credit in respect of origination and reversal of temporary differences primarily represents a tax credit arising on the impairment of property, plant and equipment in the Island of Ireland printing operations. The recognition of this tax credit is the primary reason for the increase in the Group's deferred tax asset on the Group's Balance Sheet from €44.9m at 31 December 2011 to €65.9m at 31 December 2012.

In 2011, the €29.6m deferred tax credit in respect of tax losses primarily represents the following:

(i) The recognition of trading tax losses that were previously unrecognised as they met the recognition criteria to be brought on to the Group's Balance Sheet at 31 December 2011. The recognition of these trading losses was the primary reason for the increase in the Group's deferred tax asset on the Group's Balance Sheet from €28.8m at 31 December 2010 to €44.9m at 31 December 2011; and

(ii) The recognition of capital and other tax losses which met the criteria to be recognised at 31 December 2011. The recognition of these tax losses in the Income Statement was the primary reason for the decrease in the deferred taxation liability from €23.3m at 31 December 2010 to €4.5m at 31 December 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 €10.0m (2011: credit of €22.6m), a net credit of €19.4m (2011: €30.8m) is classified as exceptional tax. In 2012, the exceptional tax credit primarily relates to a tax credit arising on the impairment of property, plant and equipment. In 2011, the exceptional tax credit primarily relates to the recognition of a deferred tax asset in relation to previously unrecognised trading tax losses, the recognition of capital and other tax losses which reduce the deferred taxation liability on the Group's Balance Sheet in relation to the Group's mastheads and a tax credit in relation to impairment charges with respect to intangible assets. The Group has unrecognised tax losses as at 31 December 2012 of €82.0m which have a tax value of €18.9m.

Tax Effect on Items in Statement of Comprehensive Income

8. (Loss)/ Earnings Per Share

NOTES TO THE FINANCIAL INFORMATION (continued)

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

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.

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.

9. 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 2012. No dividends were paid during the year and no final dividend will be paid in respect of the year ended 31 December 2012.

NOTES TO THE FINANCIAL INFORMATION (continued)

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

* 2011: Decrease in trade and other receivables on the Balance Sheet mainly driven by tighter working capital management.

** 2012: Primarily relates to restructuring charges and costs associated with financing arrangements (see note 4).

11. Other Items

(a) Retirement Benefits

The retirement benefit obligations as at 31 December 2012 in the Balance Sheet have increased by €43.2m to €190.2m (€168.4m relating to defined benefit pension schemes and €21.8m relating to a post-retirement medical aid scheme). This movement in the deficit is mainly driven by:

·; an actuarial loss of €48.0m as disclosed in the Group Statement of Comprehensive Income;

·; a credit of €2.0m in respect of the Group's retirement benefit obligations arising on a curtailment gain of €1.2m and a negative past service cost of €0.8m;

·; a reduction of €2.1m in the deficit due to employer contributions being greater than the Income Statement charge; and

·; other net movements of €0.7m.

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

(b) Currency Translation Adjustments and Other Movements in Other Comprehensive Income

A negative currency translation adjustment of €0.8m has been booked in the Group Statement of Comprehensive Income for the year ended 31 December 2012. This relates to subsidiary undertakings and has arisen due to the weakening of the South African Rand offset by stronger Sterling Pound and Australian Dollar exchange rates at 31 December 2012 compared to the rates at 31 December 2011 used in the translation of the balance sheets of subsidiaries with a functional currency different to that of the Parent Company. The Statement of Comprehensive Income also reflects a positive amount of €5.2m which is the Group's share of associates other comprehensive income/(expense).

NOTES TO THE FINANCIAL INFORMATION (continued)

11. Other Items (continued)

 (c) Transactions within the Group Statement of Changes in Equity

2012 - The €4.1m movement in the Group Statement of Changes in Equity, described as arising within associates - transactions with associate's non-controlling interests, relates to transactions with non-controlling interests arising within APN, where such transactions do not result in a loss of control of the relevant subsidiary.

2011 - The €0.2m movement in equity arising on acquisition of non-controlling interest relates to the acquisition of further shares in Independent Colleges Limited.

(d) Property, Plant and Equipment

The carrying value of the Group's property, plant and equipment decreased by €70.5m from €134.2m at 31 December 2011 to €63.7m at 31 December 2012. This decrease is driven by a €66.8m impairment charge in the Island of Ireland (see note 4).

12. Borrowings

Included in Loans and Overdrafts is €438.3m drawn under the 2009 Bank Facilities repayable up to May 2014. As in the prior year certain material subsidiaries in the Group, as defined in the Bank Facilities, have granted fixed and floating charges over certain Group assets in connection with the 2009 Bank Facilities. An Intercreditor Agreement also exists in relation to these facilities. This agreement provides that, in a liquidation situation, all intergroup debt within those companies which have signed up to the agreement is subordinated to the Bank Facilities until such time as this debt has been discharged in full. All subsidiaries with material intergroup debt within the Group have signed up to this Intercreditor Agreement, with the exception of any Group company incorporated in South Africa.

13. Intangible Assets

Impairment Reviews

The Group's indefinite life intangible assets (including goodwill) are tested annually for impairment or whenever there is an indication of impairment. As at 31 December 2012, certain intangible assets were tested for impairment and, as a result, impairment charges of €50.4m (note 4) arose on certain intangible assets in the Island of Ireland. When testing for impairment, the recoverable amounts for the Group's cash-generating units (CGUs) are measured at their value in use by discounting future expected cash flows. These calculations use cash flow projections based on management approved forecasts which reflect management's current experience and future expectations of the markets in which the CGU operates. The impairment charges reflect the Group's assessment of the impact of the prolonged challenging economic environment being experienced in the Island of Ireland and the resulting impact on their assessment of recovery of the advertising markets. The key assumptions used in the impairment assessment across CGUs in the regions were as follows:

NOTES TO THE FINANCIAL INFORMATION (continued)

13. Intangible Assets (continued)

Impairment Reviews (continued)

The Group's intangible assets were €175.9m at 31 December 2011 and €121.9m at 31 December 2012. The drop of €54.0m is primarily driven by the impairment charges of €50.4m.

Supplementary Non-IFRS Information

The Balance Sheet reports the carrying value of newspaper mastheads at their acquired cost. Where these assets have been acquired through a business combination, cost will be the fair value allocated in acquisition accounting. The value of internally generated newspaper mastheads or post-acquisition revaluations are not permitted to be recognised in the Balance Sheet in accordance with IFRS and, as a result, no value for certain of the Group's internally generated newspaper mastheads (e.g. the three main Irish titles, the Irish Independent, the Evening Herald and the Sunday Independent) is reflected in the Balance Sheet.

While impairment charges have been recorded during the current and prior periods on certain of the Group's intangible assets, the Directors are of the view that the Group has many other intangible assets which have substantial value that is not reflected on the Group's Balance Sheet. This is because these intangible assets are carried in the Group's Balance Sheet at a nil value or a value which is much less than their recoverable amount. The Directors are of the view that if these intangible assets were allowed to be carried on the Group's Balance Sheet then the Group's intangible assets would be greater than currently reported.

14. Subsequent Events

On 5 April 2013, the Group announced that it had entered into a binding agreement ('Sale Agreement') with Sekunjalo Independent Media Consortium in respect of the disposal of Independent News & Media South Africa for a gross consideration of R2 billion (approximately €167m), before expenses and subject to certain adjustments under the terms of the Sale Agreement. The Disposal is subject to INM bank consent, South African Competition Commission clearance and, owing to its size, is also subject to the approval of INM's shareholders as a Class 1 transaction under the Irish and UK Listing Rules. The net proceeds of the Disposal are intended to be applied to repay senior debt. As a result, the business to be disposed meets the classification as an asset held-for-sale post year end.

On 26 April 2013 the Group announced it had entered into a formal agreement ('Lock-up Agreement') with its Banks to restructure its Bank Facilities (the 'Restructuring') over a number of stages, to be completed by no later than 31 December 2013. The Lock-up Agreement includes a standstill under which the Group's Banks agree not to take any action to enforce any claim for payment against the Group until:

·; the documentation of the Restructuring has been finalised and entered into by all relevant parties; and

·; the first stage of the Restructuring becomes effective, meaning that the disposal of Independent News and Media South Africa has completed and the net proceeds have been applied to reduce the Bank Facilities;

subject to a Completion Long-Stop Date of 15 July 2013 or such later date agreed between Independent News and Media PLC and Lloyds TSB Bank plc acting as agent for the Banks, up to 31 October 2013. Please see note 1 for further details.