Independent News & Media Regulatory News (INM)

FINANCIAL RESTRUCTURING COMPLETE

OPERATING PROFIT IN LINE WITH 2012

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

Dublin/London 13 March 2014: Independent News & Media PLC ('INM' or the 'Group') today announced the Group's results for the year ended 31 December 2013.

2013 | FINANCIAL PERFORMANCE (Continuing Group*)

§ Operating Profit, pre-exceptionals, of €32.7 million in line with 2012, despite a 6.6% revenue

decline;

§ Improving H2 advertising revenue trend, further improved in year-to-date 2014;

§ Operating Costs, pre-exceptionals, reduced by €22.7 million (7.3%) offsetting revenue decline;

§ Operating Margin, pre-exceptionals, improved by 60bps to 10.1%; and

§ Digital revenue growth, of 12.0% to €9.3 million.

2013 | STRATEGIC & OPERATINGHIGHLIGHTS

§ Successful completion of financial restructuring:

§ Net Debt reduced by €327.1 million to €95.3 million - Net Debt to EBITDA of 2.4 times;

§ Significant reduction in Group's annual interest costs, to c.€6.5 million in 2014 (based on current interest rates); and

§ Debt maturity profile extended to 2018.

§ Digital repositioning:

§ Substantial progress in driving online traffic (5.4 million unique visitors in December 2013), growing digital capacity and implementing transformational digital strategy; and

§ Integration and strengthening of publishing and digital editorial teams, to drive continued digital growth.

§ Profit enhancement initiatives:

§ Successful implementation of "Project Resolute" delivered targeted €26 million cost savings and revenue enhancements; and

§ New profit enhancement programme - "Project Quantum" underway targeting further substantial cost savings and revenue enhancements.

§ Process for disposal of the Education businesses underway to focus on core business.

*Note: The 'Continuing Group' excludes the results of the South African business which was disposed of during 2013 and the Education businesses, which were classified as "held for sale" at the year end. Unless otherwise stated, the figures quoted in this section are for the 'Continuing Group'.

Commenting, Vincent Crowley, Group Chief Executive Officer, said:

"2013 was a defining year for INM. The Group's balance sheet has been significantly restructured and INM now has the capital structure to support our continued repositioning and ongoing digital investment programme. In addition, we continue to reduce operating costs and deliver additional efficiencies across the business, so that INM is well positioned to benefit from Ireland's improving macro-economic performance in the years ahead.

"2014 represents an investment phase for our digital business. Our digital strategy is structured around our strong portfolio of market-leading national and regional titles, most notably, independent.ie, where our online audience grew by 54% to an average of 4.8 million unique visitors in 2013. Digital presents substantial opportunities that will underpin the sustainability of future revenue streams and drive value for shareholders.

"We continue to experience a relative improvement in advertising trends. The rate of decline in print advertising revenue has slowed further, with revenues down 2.8% year to date. Our digital advertising revenue continues to grow and is up 14.6% year to date. Despite these encouraging trends, visibility remains short and forecasting in the current trading environment is difficult. INM is well positioned, however, with a well invested asset base, an increasingly efficient cost base and a strong and growing digital offering to convert any improvement in trading conditions into an improved financial performance."

COMPLETION OF FINANCIAL RESTRUCTURING

In April 2013, the Group announced that it had reached a comprehensive restructuring agreement with its syndicate of eight lenders.

This restructuring agreement included three stages:

1. The sale of Independent News & Media South Africa ('INMSA') for R2 billion (€150.7 million) - completed in August 2013, with the net proceeds being applied to debt reduction;

2. A restructuring of the Group's ROI defined benefit pension schemes, involving the reduction of members' accrued pension benefits. The reductions were approved by the Irish Pensions Board in September 2013 and delivered a reduction in the Group's pension deficit of €111.4 million; and

3. An equity issue which was completed in December 2013. INM raised c.€40.0 million of net proceeds through the issuance of 152,517,988 new Ordinary Shares at €0.07 per share. €40.0 million was applied to debt reduction and delivered a gross core debt of approximately €118.0 million.

In addition to substantially reducing INM's debt, the completion of the financial restructuring also significantly reduces the Group's annual interest costs and extends INM's debt maturity profile to 2018. Following the restructuring, INM retains other facilities and credit lines of approximately €10.0 million, to provide the Group with additional flexibility as it looks to the growth and development of the business in 2014 and beyond.

At the end of December 2013, the Group's net debt, which includes €24.4 million of cash and €10.0 million placed in escrow to cover future potential warranty claims relating to the sale of INMSA, was €95.3 million and results in a Net Debt to EBITDA of 2.4 times.

OPERATIONS

The Key Operating Highlights in 2013 were as follows:

· Targeted €26 million of revenue/cost initiatives delivered via "Project Resolute";

· independent.ie remains the No.1 news website (comScore) in the Republic of Ireland with an average of 4.8 million unique visitors (up 54% on 2012) generating an average of 51.6 million page impressions (up 35% on 2012);

· Irish Independent continues to dominate the quality daily market with an ABC of 117,361 - increasing market share. The Irish Independent increased its readership in print and online to 666,000 - and now reaches 52,000 more readers than its two closest rivals combined;

· Sunday Independent, which recorded an ABC1 of 229,382 - remains the biggest selling quality Sunday newspaper and with a readership of 962,000 continues to provide the largest regular audience on the island of Ireland across any advertising platform;

· The Herald increased its market share in the popular daily market with an ABC1 of 56,119. The Herald has a total readership of 303,000, with 235,000 of these readers based in Dublin - strengthening its position as Dublin's most-read newspaper;

· Sunday World,which recorded an ABC1 of 208,281 increased its market share in the popular Sunday market and continues to be the largest selling and most-read tabloid on the island of Ireland. The Sunday World has a total readership of 740,000;

· Successful launch of sundayworld.com, a tabloid 24/7 news website;

· The Belfast Telegraph Group continues to lead the way with multi-platform media solutions - Belfast Telegraph and Sunday Life in print and online reach 575,0003 people in a week;

· GrabOne, continues to be the No.1 Irish-owned daily deals site, growing market share to c.19% in 2013 and recording over 460,000 transactions during that period;

· Newspread, the largest newspaper wholesaler distributor on the island of Ireland, continues to successfully execute its diversification strategy; and

· Process for disposal of the Education businesses underway to focus on core business.

_____________

2013 Trading Performance

During 2013, revenue for the Continuing Group declined by 6.6% or €22.7 million to €322.4 million. However, INM's ongoing cost take-out programme has delivered substantial savings and operating profit before exceptionals was maintained at €32.7 million.

Total print advertising revenue in the year decreased by 11.5% or €9.5 million to €73.1 million. With the exception of Property advertising (which recorded a substantial increase off a modest base) all print advertising categories were down on the prior year. The Group experienced an improving advertising trend in H2.

Total digital advertising revenue increased by 12.0% or €1.0 million to €9.3 million, with the majority of this growth attributable to GrabOne (up 29.3% on the prior year). Similar to print advertising revenue, digital advertising revenue also experienced an improving trend in H2.

Circulation revenue benefitted from some modest cover price increases, but overall revenue declined by 4.4% in 2013. The Group's leading titles maintained and in some cases increased market share, further underpinning the Group's market share strength.

Profit Enhancement Initiatives

In 2013, INM successfully reduced operating costs, pre-exceptionals, by €22.7 million or 7.3%, despite a net investment of €2.4 million in Digital in the second half of the year.

This reflects the Group's continuing commitment to reduce operating costs in every aspect of its business and to produce and deliver all of its market-leading products more efficiently. INM has, at the end of 2013, delivered on its stated target of annualised benefits of approximately €26 million from a range of revenue and cost saving/efficiency initiatives.

In late 2013, the Group embarked on a further profit enhancement programme, "Project Quantum" - targeting substantial additional cost savings and revenue enhancements.

DIGITAL

INM's digital offering is a central element to the Group's growth strategy. INM continues to capitalise on the strength of its portfolio of media assets (including its No.1 news website independent.ie) and build customer engagement online.

INM's digital strategy is to drive profitable growth by:

· Capitalising on its strength in creating best-in-class digital content;

· Growing content and audience reach across new content verticals;

· Continuing to be the leader in breaking news online;

· Bringing new innovative advertising solutions to the market;

· Amplifying brands across the independent.ie platform;

· Ongoing growth of local, national and international online audiences & communities;

· Superior customer engagement; and

· Audience-first newsroom.

INM has a strong base from which to enhance its digital offering. In 2013, independent.ie continued its development of the site to include: greater multi-media content; an increasing number of domestic and international breaking news stories; greater presence across social media; and greater functionality across platforms including mobile.

INM is implementing a structured approach to new product development and deployment to enable a fast-moving product innovation environment. The development of new products and services, to drive increased customer engagement and revenue growth, will be delivered across multiple platforms with a focus on the high growth mobile market.

Our expanding digital team is enabling INM to capitalise on emerging opportunities in the digital arena and to better leverage our unique content across all of our platforms. Our unrivalled audience reach, both in print and online, is the foundation of our publishing performance and growing digital strategy.

Classified Sites

In addition to market-leading news sites, INM has a strong and growing portfolio of commercially focused classified sites, including nijobfinder.co.uk and propertynews.com in Northern Ireland, which showed very strong year on year revenue growth of 20.4%. The Group's joint venture, CarsIreland.ie, is the No.2 player in the Republic of Ireland market and continues to perform well.

During 2013, the Group's portfolio extended into travel through an investment in ClickandGo.com, a leading Irish travel site. ClickandGo.com is an online travel agent, with a strategic alliance with Aer Lingus, offering holidays in Europe and the US.

GrabOne

GrabOne is the Group's e-commerce and daily deals site, which continues to demonstrate strong growth and, in particular, increasing mobile penetration. During 2013, GrabOne's revenue increased by 29.3%. Market share of the coupon market is now at c.19%. The GrabOne product portfolio was extended in 2013, with further growth targeted in 2014 through a series of specific sites including GrabOneEscapes and GrabOneStore, along with a number of other innovations.

DISCONTINUED OPERATIONS

The Group successfully disposed of INM South Africa for R2 billion (€150.7 million) in August 2013, with the net proceeds being applied to debt reduction.

In late 2013, the Board committed to selling the Group's Education businesses, due to its desire to focus on its core operations.

Accordingly, INM South Africa and the Education businesses results for the year are reported in "Discontinued Operations".

EXCEPTIONALS

The Group recorded a Net Exceptional Credit of €215.3 million in 2013. This credit mainly consists of a restructuring gain of €111.4 million due to the restructuring of the significant Republic of Ireland defined benefit pension schemes; a debt write off on the Group's Bank Facilities of €142.0 million; a write back of back-end bank fees of €12.1 million and a net gain on the disposal of INMSA of €28.0 million.

The balance of the Exceptionals figure mainly consists of a charge of €4.9 million relating to the employee share issue in December 2013; a charge of €14.4 million relating to miscellaneous restructuring costs (primarily redundancy costs) in the Island of Ireland; costs of €5.6 million relating to the renegotiation of the Group's financing arrangements; a charge of €12.0 million in APN, representing the Group's share of an APN exceptional charge; €10.1 million foreign exchange losses booked on an intergroup loan (relating to South Africa, whilst held for sale); and a €30.4 million exceptional tax charge primarily due to a reduction in the Group's deferred tax asset related to retirement benefit obligations and a revision to the estimate of the recoverability of the Group's deferred tax assets.

SHARE OF RESULTS OF ASSOCIATES AND JOINT VENTURES

The Group's Associates and Joint Ventures mainly comprise its 28.95% shareholding in APN (which will reduce to c.18.6% on completion of the APN equity issue), its 50% shareholding in the Irish Daily Star, its 50% shareholding in CarsIreland.ie and its 33.3% shareholding in metro herald.

APN's net profit after tax before exceptional items was A$59.5 million, up 10% on the prior year. Earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations and before exceptional items was up 8% to A$162.8 million, with revenue from continuing operations down A$5.8 million to A$817.2 million.

APN's ongoing focus on cost reductions and generating cash, as well as the contribution from a number of small asset sales, resulted in A$63.0 million in net cash inflows during the period. This cash inflow was considerably ahead of the A$40.0 million to A$50.0 million target set at the beginning of the year. Overall net debt as at 31 December 2013 was A$436.9 million.

Since year-end, APN completed the sale of APN Outdoor to Quadrant Private Equity for A$69.0 million and the sale of e-commerce business brandsExclusive for A$2.0 million in cash and 8% of the equity in Aussie Commerce, one of Australia's leading e-commerce groups. The sale of APN's wholly-owned New Zealand magazine titles to Bauer Media Group is expected to complete in March.

In addition, APN has recently announced the acquisition of the remaining 50% of Australian Radio Network and The Radio Network from its US joint venture partner Clear Channel Communications Inc, which will be part financed by a A$132.0 million equity issue. As announced on 19 February, the Group will not be participating in APN's proposed equity issue - this will result in INM's stake in APN being reduced to c.18.6%.

DIVIDENDS

The Directors are not proposing a dividend for 2013. There was no dividend paid or declared in respect of 2012.

- ENDS -

For further information, contact:

INDEPENDENT NEWS & MEDIA PLC

GROUP INCOME STATEMENT

* Note 5

GROUP STATEMENT OF COMPREHENSIVE INCOME

GROUP BALANCE SHEET

GROUP STATEMENT OF CHANGES IN EQUITY

* 2013: Other movement of €0.3m relates to cash flow hedging reserve €0.4m and available-for-sale financial assets reserve (€0.1m). (2012: Other movement of €1.4m includes cashflow hedging reserve €2.0m and available-for-sale financial assets reserve (€0.6m)).

** 2013 Unaudited; 2012 Audited.

GROUP CASH FLOW STATEMENT

* Share issue costs of €0.6m unpaid at year end.

NOTES TO THE FINANCIAL INFORMATION 

1. Basis of Preparation of Financial Information under IFRS

Going Concern

Independent News & Media PLC ("the Company") is a company domiciled in Ireland. These condensed preliminary Group financial statements as at and for the twelve months ended 31 December 2013 comprise the Company and its subsidiaries (together referred to as "the Group") and the Group's interest in associates and joint ventures.

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 approval of the 2013 Annual Report, the time period that the Directors have considered in evaluating the appropriateness of 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 2013 will be annexed to the Company's annual return for 2013. The annual report and accounts will be approved by the Board of Directors by 30 April 2014. 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 2012 has been annexed to the Company's annual return for 2012 to the Companies Registration Office. The audit opinion on these financial statements was unqualified.

The 2013 statutory accounts of the Company will be available on the Company's website inmplc.com as of 30 April 2014. Consistent with prior years, the full financial statements for the year ended 31 December 2013 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 2013 in accordance with EU adopted International Financial Reporting Standards (IFRS) and with those parts of the Companies Acts, 1963 to 2013, applicable to companies reporting under IFRS. This financial information comprises the Group Balance Sheets as of 31 December 2013 and 31 December 2012 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 2013 and 31 December 2012 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 2012 and are described in those financial statements on pages 58 to 73.

Except for the changes below, the Group has consistently applied the accounting policies set out below to all years presented in these consolidated financial statements.

The following new and amended standards and interpretations are effective for the Group for the first time for the financial year beginning 1 January 2013:

· Presentation of Items of Other Comprehensive Income - Amendments to IAS 1

· IAS 19 Employee Benefits (2011)

· IFRS 13 Fair Value Measurements

NOTES TO THE FINANCIAL INFORMATION (continued)

1. Basis of Preparation of Financial Information under IFRS

General Information (continued)

Presentation of Items of Other Comprehensive Income(Amendments to IAS 1): As a result of the amendments to IAS 1, the Group has modified the presentation of items of other comprehensive income in its consolidated statement of comprehensive income, to present separately items that may be reclassified to profit or loss in the future from those that would never be reclassified.

Tax impacts have also been so allocated. Comparative information has been re-presented accordingly. The adoption of the Amendment to IAS 1 has no impact on the recognised assets, liabilities and comprehensive income of the Group.

IAS 19 Employee Benefits (2011): The Group's adoption of IAS 19 Employee Benefits (2011) changed its basis for determining the income or expense related to defined benefit plans. As a result of the change, the Group now determines the net interest expense/income on the net defined liability for the year by applying the discount rate used to measure the defined benefit obligation at the beginning of the year to the net defined benefit liability at the beginning of the year. It then takes into account any changes in the net defined benefit liability during the year as a result of contributions and benefit payments. The net interest on the net defined benefit liability comprises (i) interest expense on the defined benefit obligation; (ii) interest income on plan assets; and (iii) the interest on the effect of the asset ceiling. Previously the Group determined the return on plan assets based on their expected long-term rate of return.

In addition, IAS 19 (2011) states that only the costs of managing plan assets reduce the return on plan assets, thereby requiring any other administration costs to be treated as an expense within profit or loss.

The change in accounting policy had no impact on net assets. It reduced 2012 profit before exceptional items (operating costs line item) by €1.4m with a corresponding decrease in OCI in retirement benefits actuarial losses. The impact on 2012 EPS was to increase the loss per ordinary share (basic and diluted) by €0.003.

IFRS 13, "Fair value measurement": IFRS 13 aims to improve consistency and reduce complexity by providing a single, unified definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. The requirements do not extend the use of fair value accounting but provide guidance on how fair value should be measured where its use is already required or permitted by other standards within IFRS. IFRS 13 also requires specific disclosures on fair values, some of which replace existing disclosure requirements in other standards, including IFRS 7, "Financial Instruments: Disclosures".

There are a number of other amendments to existing standards, including IAS 36, that are effective for the Group for the first time from 1 January 2013. None of these had a material impact on the Group.

Comparative Information

In certain instances, the comparative information to the financial statements has been restated as follows:

(i) On 11 December 2013, APN News & Media ('APN') advised that their company's 2012 financial statements contained a non-cash error arising from the impairment modelling of the intangible assets of its wholly owned subsidiary, Australian Regional Media ('ARM'). The ARM intangible assets were overstated at 31 December 2012 by A$51.5m (€40.5m). INM's share of this error is reflected in the 2012 restated comparatives. The impact on the 2012 comparatives was to increase INM's share of APN's impairments by €12.2m, and to reduce INM's investment in associates and net assets by €11.9m, with the balance of €0.3m impacting on foreign currency translation reserves. The impact on 2012 was to increase the loss per share (basic and diluted) by €0.022.

(ii) INM's South African business was disposed of in August 2013, consequently the South African business is treated as a discontinued operation in 2013 and the Income Statement comparatives for 2012 have been reclassified accordingly (see note 18).

NOTES TO THE FINANCIAL INFORMATION (continued)

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

Comparative Information (continued)

(iii) INM's educational businesses are classified as held for sale as at 31 December 2013 and are treated as a discontinued operation in 2013 with the Income Statement comparatives for 2012 reclassified accordingly (see note 18).

(iv) €5.8m of refinancing fees recognised in 2012 in relation to the Group's renegotiation of its financing arrangements have been reclassified from exceptional operating costs to exceptional finance costs.

(v) IAS 19 Employee Benefits (2011): The Group's adoption of IAS 19 Employee Benefits (2011) changed its basis for determining the income or expense related to defined benefit plans. See aforementioned IAS 19 in this note for further details.

Risks and uncertainties

(i) Exposure to changes in the economies in which we operate and changing customer spending patterns

The Group's results are impacted by factors outside its control such as the prevailing economic climate, levels of employment, disposable income, interest rates, consumer sentiment and consumer perception of economic conditions. In particular, newspaper advertising revenues are cyclical and substantially dependent upon prevailing economic conditions. Advertising revenue has historically been cyclical, with less being spent on advertising in times of economic downturn. Following the divestitures completed by the Group over recent years, including the South African business in 2013, the main geographies to which the Group is directly exposed are now the Republic of Ireland and Northern Ireland (with indirect exposure to Australasia via its investment in APN). This geographic concentration means that the Group is significantly exposed to the economic environment in the Republic of Ireland and Northern Ireland. The Group is at risk from the on-going weakness in advertising, particularly in categories such as property and recruitment.

In common with the majority of media businesses, INM's revenues are heavily dependent on circulation volumes and print advertising, with revenue from circulation having increased as a percentage of overall revenue given the decline in advertising revenue. Competition for advertising among newspaper publishers is largely based upon circulation, readership and content. While circulation volumes for INM's titles have declined over recent years, INM's titles continue to retain market leading positions, in terms of both circulation and readership in most of their key markets.

(ii) The Impact of Technological and Market Changes

The Group operates in highly competitive environments that can be subject to rapid change. The Group's products and services, and their means of delivery, are affected by technological innovations, changing legislation, competitor activity or changing customer behaviour. A structural change in advertising markets resulting in significant advertising moving away from traditional products to the internet may affect the Group's results both positively and negatively. Also, print media operations have been facing declining circulation numbers for some time due to factors including, but not limited to, the proliferation of internet use. The Group continues to develop online strategies to complement its products.

The Group's businesses are dependent on technology. Information systems are critical for the effective management and provision of services around the Group. Disruption to the Group's information technology infrastructure could result in lost revenue. Business continuity plans are in place for all significant businesses.

Capital expenditure on printing presses, digital technology and other assets can be significant. It is difficult to predict future changes and the cost of updating, renewing or replacing existing technologies and the impact of this on the Group's operating performance. Were a significant change to occur that required material unforeseen expenditure, this could have a material adverse effect on INM's business, results of operations and overall financial condition.

NOTES TO THE FINANCIAL INFORMATION (continued)

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

Risks and uncertainties (continued)

(iii) Political, Economic and Social Risks

The markets in which the Group operates may be affected by numerous factors, many of which are beyond the Group's control and the exact effects of which cannot be accurately predicted. Within geographical markets, such factors include general economic and political activities, including the extent of any governmental regulation and taxation. The Group could be adversely affected by changes in economic, political, administrative, taxation or other regulatory factors, whether under Irish law or in any other jurisdictions in which the Group may operate now or in the future.

(iv) Environmental, Health and Safety Laws, Regulations and Standards

The Group is subject to a broad range of laws, regulations and standards, including those relating to pollution, the health and safety of employees, protection of the public, protection of the environment and the storage and handling of hazardous substances and waste materials. These regulations and standards are becoming increasingly stringent. It is the Group's policy to require that all of its subsidiaries comply with applicable laws, regulations and standards. However, violations of such laws, regulations and standards, in particular environmental and health and safety laws, could result in restrictions on the operation of the Group's sites, damages, fines or other sanctions and increased costs of compliance with potential reputational damage.

(v) Newsprint Price Risk/Supply Risk

Newsprint represents a significant cost within the Group's publishing operations. Newsprint price volatility is a factor facing all operators in the print media industry and can influence a company's profitability significantly, depending on the prevailing economic conditions at a particular time. In some instances, it is possible that cover prices can be increased to offset newsprint price increases and thereby maintain margins, although there can be no assurance that cover prices can be effectively increased. As the price of newsprint affects all such operators in broadly equal terms, it does not tend to result in competitive advantage or disadvantage for any one participant in that market. Newsprint prices are subject to volatility arising from variations in supply and demand. Generally, these variations are not large but from time to time increases may be significant. The Group's newsprint requirements are monitored closely and, where deemed advantageous, long-term arrangements are agreed with suppliers to limit the potential for price volatility. The Group has a number of newsprint suppliers to reduce dependency on any specific supplier.

(vi) Taxation Risk

The Group is subject to taxation at differing rates across the jurisdictions in which it operates. Whilst endeavouring to manage its tax affairs in an efficient manner, due to an ever more complex international tax environment, there will always be a level of uncertainty when provisioning for the Group's tax liabilities. There is also a risk of tax laws being amended by authorities in the jurisdictions in which the Group operates which could have an adverse effect on the Group's results. The Group continually takes the advice of external experts to help minimise this risk.

(vii) Litigation

From time to time, by the nature of their business, newspapers are subject to libel or other types of litigation. Although the Group's newspaper titles have procedures in place to attempt to limit the nature and extent of any exposure in this area and the Group also makes provisions, where necessary, in this regard on an annual basis, there can be no assurance that litigation in the future will not have a material adverse effect on the Group's business, results or financial condition.

(viii) Financial Risks

The principal financial risks are credit risk, liquidity risk and market risk. Market risk includes foreign exchange risk, interest rate risk, and price risk.

NOTES TO THE FINANCIAL INFORMATION (continued)

2. Financial Restructuring

During 2013 the Group restructured its debt facilities ('the Restructuring'). This Restructuring entailed a number of elements:

(a) The disposal of INMSA in August 2013 (see note 18) and the application of the net proceeds to the repayment of debt resulting in an initial amendment and restatement of the Group's remaining core debt facilities;

(b) A restructuring of the Group's significant Republic of Ireland defined benefit pension schemes involving the reduction of members' accrued benefits (this was approved by the Irish Pensions Board in September 2013). In accordance with IAS19, an exceptional gain of €111.4m arose on completion of the restructuring relating to negative past service costs and settlement of liabilities (see note 12); and

(c) Following the completion of these events at (a) and (b), the final stage of the Restructuring took place in December 2013, whereby, in return for the payment to the Lenders of €40.0m, being the net proceeds of a capital raise and the issue to them of 152,517,988 new fully-paid Ordinary Shares ('Lender Shares') representing €10.7m in value of the enlarged issued share capital of the Company (see note 11), the Company achieved a debt reduction of approximately €199.3m and modified terms (including a maturity in 2018, with no bank amortisations until 2015) for the residual debt. Of this €199.3m debt reduction, €40.0m was repaid from the proceeds of the capital raise, €10.7m related to the Lender Shares at the issue price and the balance of €148.6m (including €6.6m of interest differential capitalised - see note 7 for further information) related to the debt write-off. In addition €12.1m of net bank fees were credited to the Income Statement as an exceptional finance gain.

3. Revenue

An analysis of the Group's revenue from continuing operations for the year is as follows:

4. 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 operated in two geographical areas: Island of Ireland and South Africa. The components of the Group whose operating results were regularly reviewed by the CODM to make decisions about the allocation of resources, and in performance assessment are contained in the table on the following page.

In 2013, the Group disposed of its South African segment and accordingly this segment is included under discontinued operations. As at 31 December 2013, the Island of Ireland Non-Publishing segment is classified as held for sale, and hence included as a segment under discontinued operations.

NOTES TO THE FINANCIAL INFORMATION (continued)

4. 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.

*€8.5m plus discontinued operations share of associates and joint ventures of €0.2m, and discontinued operations net finance income of €0.1m, less discontinued operations taxation charge of €1.5m equals €7.3m of discontinued operating profit (before exceptional items) per the Income Statement.

APN's revenues for the year ended 31 December 2013 were €616.9m (2012: €717.8m) and APN's operating profit before exceptional items for the year ended 31 December 2013 was €82.0m (2012: €89.6m).

NOTES TO THE FINANCIAL INFORMATION (continued)

4. Segmental Reporting (continued)

NOTES TO THE FINANCIAL INFORMATION (continued)

5. 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.

* Of this exceptional gain of €215.3m in 2013, €13.7m of an expense is shown as an exceptional expenditure outflow in the Group Cashflow Statement. The €13.7m primarily relates to South African asset disposal costs of €6.2m and miscellaneous restructuring costs (primarily redundancy costs) of €7.5m in the Island of Ireland.

(i) 2012

Primarily relates to the following non-cash impairment charges of €117.8m:

(a) €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 the advertising markets in the Island of Ireland;

(b) €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

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

(ii) 2013

Primarily relates to the following:

(a) A retirement benefits restructuring gain of €111.4m due to the restructuring of the significant Republic of Ireland defined benefit pension schemes;

(b) A charge of €4.9m related to the employee share issue in December 2013; and

(c) A charge of €14.4m related to miscellaneous restructuring costs, primarily redundancy costs in the Island of Ireland.

2012

Primarily relates to the following:

(a) Headcount restructuring charges of €13.6m across the Group;

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

NOTES TO THE FINANCIAL INFORMATION (continued)

5. Exceptional Items (continued)

(c) A credit of €0.9m in respect of the Group's retirement benefit obligations arising on a negative past service cost in the Island of Ireland.

(iii) 2013

Primarily relates to the following:

(a) A debt write off of the Group's Bank Facilities of €142.0m in relation to the Restructuring which was completed in 2013;

(b) A write back of bank back end and amendment fees of €12.6m;

(c) Costs incurred during the year in relation to the Group's renegotiation of its financing arrangements of €5.6m; and

(d) A write off of the balance of the 2009 Bank Facility front end fees of €0.5m.

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 advisers for the duration of the refinancing negotiations). The costs also relate to amendment fees payable to the Group's Banks as part of the renegotiation of financing arrangements during 2012.

(iv) 2013

The share of associates' and joint ventures' exceptional items (net of tax and non-controlling interests) of €12.4m can be broken down as follows:

(a) APN - primarily relates to non-cash impairment charges for brandsExclusive and APN Outdoor (€15.0m), offset by other items of €3.0m.

(b) Star - redundancies of €0.4m.

The above amounts represent INM's share of these items.

2012

The net charge of €139.1m includes a €148.0m non-cash impairment charge and a €17.8m disposal gain arising in APN News & Media Limited ('APN'), which represents INM's share of these items. 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 those 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 partial disposal loss. The remaining net cost of €3.5m mainly relates to restructuring costs and asset write downs in APN. The €24.0m relates to an impairment on the Group's investment in APN.

(v) 2013

Relates to the net gain of €28.0m on the disposal of the South African business, offset by costs of €0.4m related to the disposal of the Education businesses.

2012

Relates to INM's South African business which was disposed of in August 2013 and presented as a discontinued operation. This exceptional item relates to costs of disposal on the sale of the South African businesses.

(vi) 2012

Relates to impairment of assets in South Africa.

(vii) 2012

Relates to restructuring costs in South Africa. 

NOTES TO THE FINANCIAL INFORMATION (continued)

5. Exceptional Items (continued)

(viii) 2013

Relates to INM's South African business which was disposed of in August 2013 and presented as a discontinued operation. This exceptional item relates to the foreign exchange losses of €10.1m booked on an intergroup loan (the settlement of which has occurred arising from the South African disposal proceeds), following classification of this business as held for sale. In the past, foreign currency gains and losses on this loan were recognised in other comprehensive income, on the basis that it formed part of the net investment and its settlement was neither planned nor foreseen in the consolidated financial statements, and presented in the currency translation reserve within equity.

6. Equity Interest in APN and Assessment of Carrying Value

INM has a 28.95% shareholding in APN as at 31 December 2013 (31 December 2012: 28.95%). 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' and within "Impairment of associates and joint ventures". As mentioned in note 5, in 2012 the Group recognised a €24.0m goodwill impairment on the Group's investment in APN. No such impairment was recognised in 2013.

Value in Use Assessment of Investment in APN

As at 31 December 2013 INM carried its investment in APN on its Balance Sheet at an amount of €86.9m or A$0.70 per APN share held. However, at 31 December 2013 the APN share price as listed on the Australian Stock Exchange was A$0.45 per share (value of INM stake was approx. €55.8m at 31 December 2013). The APN share price as listed on the Australian Stock Exchange on 12 March 2014 was A$0.59 per share (value of INM stake approx. €73.0m).

The Group has compared the carrying value of its investment in APN to the estimated recoverable amount of its investment in APN. Under IFRS the estimated recoverable amount of an asset is the higher of its fair value less costs of disposal and its value in use. The Group has determined that the value in use of INM's investment in APN was greater than its carrying value of A$0.70 per APN share and hence INM's investment in APN is not impaired.

Impairment Charges Recorded by APN/Sensitivity Analysis

See note 5 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. As mentioned in note 5, INM recognised a non-cash impairment charge of €15.0m in relation to APN's brandsExclusive and APN Outdoor CGUs (being INM's share of the impairment charge recorded by APN in respect of these CGUs) as these CGUs were treated as discontinued operations and assets held for sale.

All of APN's CGUs, except for the Australian Regional Media (ARM) and the iNC Digital Media CGUs, have sufficient headroom such that changes to key assumptions would not give rise to an impairment charge. For the ARM CGU, a 1% increase in the discount rate used would result in an impairment provision of €5.8m. A 1% decrease in long-term growth rates would result in an impairment of €4.8m. If forecasted cash flows were to decrease by 10%, an increase in the impairment provision of €6.7m would be required.

For the iNC Digital Media CGU, a 1% increase in the discount rate used would result in an impairment provision of €0.6m. A 1% decrease in long-term growth rates would result in an impairment provision of €0.6m. If forecasted cash flows were to decrease by 10% in iNC Digital Media CGU, an impairment provision of €0.5m would be required.

NOTES TO THE FINANCIAL INFORMATION (continued)

7. Net Finance Costs

On 2 April 2013, the Group entered into a formal agreement ('Lock-up Agreement') with its Banks to restructure its bank debt facilities entered into in 2009 ('2009 Bank Facility') over a number of stages, to be completed by no later than 31 December 2013. Interest was accrued and paid in accordance with the 2009 Bank Facility up to the date of the Lock-up Agreement. Thereafter interest was paid on the basis of a notional €150.0m of debt up to the date of completion of the first stage of the Restructuring, being the successful disposal of INMSA and application of the proceeds to reduce the 2009 Bank Facility on 27 August 2013 ('Retranche Date'). The interest differential between the cash paid on the notional €150.0m of debt and the interest accrued on the full 2009 Bank Facility during this interim period was accrued and capitalised to debt on the Retranche Date.

On subsequent completion of the final stage of the Restructuring on 20 December 2013, being the successful capital raise and application of €40.0m of these proceeds to further reduce the 2009 Bank Facilities, the Group's core debt was reduced to €118.0m plus other available facilities and credit lines. An element of the debt reduction (€6.6m), primarily reflecting write-off of the capitalised interest differential noted above, was credited to finance costs, with the balance of the debt write-off reflected as an exceptional finance gain (see note 5).

8. Taxation

(a) Amounts recognised in profit or loss

(b) Amounts recognised in OCI

NOTES TO THE FINANCIAL INFORMATION (continued)

8. Taxation (continued)

(c) Reconciliation of effective tax rate

The total tax charge for the year is different from the standard rate of Corporation Tax in Ireland of 12.5% (2012: 12.5%). The differences are explained below:

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 was 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.

For further information on movement in deferred tax assets in 2013, see note 16.

Within the total tax charge of €38.6m (2012: credit of €14.2m), a net charge of €30.4m (2012: credit of €18.6m) is classified as exceptional tax. In 2013, the exceptional tax charge primarily relates to a reduction in the Group's deferred tax asset related to retirement benefit obligations arising from the restructuring of its significant Republic of Ireland defined benefit pension schemes (€13.9m), the reassessment of the probability of recoverability of the Group's deferred tax asset in relation to forecast future profitability as outlined in note 16 (€19.3m), and a tax credit for other exceptional items of €2.8m. In 2012, the exceptional tax credit primarily relates to a tax credit arising on the impairment of property, plant and equipment.

NOTES TO THE FINANCIAL INFORMATION (continued)

9. Earnings/(Loss) Per Share

Basic earnings per share is calculated by dividing the profit 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 or increase earnings per share.

At 31 December 2013, 936,949 options (2012: 1,051,835) were excluded from the diluted weighted average number of ordinary shares calculation because their effect would have been anti-dilutive.

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

NOTES TO THE FINANCIAL INFORMATION (continued)

10. Investments in Associates and Joint Ventures

*In 2013, share of results of associates and joint ventures of €1.1m as shown in the income statement, plus share of results of associates and joint ventures within discontinued operations of €0.2m, gives the total share of results of associates and joint ventures of €1.3m.

In 2012, within share of results, the carrying value of certain investments in associates and joint ventures were reduced to their recoverable amount through the recognition of an impairment loss of €24.0m. This impairment loss arose on the Group's investment in APN and was the result of the impact of the economic downturn on APN's operations. In 2012, share of losses of €149.1m plus the impairment of €0.1m on loans to associates adjusted for share of profits of associates and joint ventures within discontinued operations of €0.4m, gives the total share of losses of associates and joint ventures of continuing operations of €149.6m. The €149.6m is broken down as follows in the Income Statement:

€125.6m - Share of results of associates and joint ventures; and

€24.0m - Impairment of associates and joint ventures.

*\* The closing balance primarily relates to the Group's 28.95% investment in APN. See note 6 for details of the carrying value and impairment assessment relating to the Group's investment in APN.

(i) Carrying Value

The reporting year end dates of the Group's associates and joint ventures are the same as the Group's reporting year end date.

(ii) Associates

Summarised financial information in respect of the Group's associates is set out below:

NOTES TO THE FINANCIAL INFORMATION (continued)

10. Investments in Associates and Joint Ventures (continued)

(ii) Associates (continued)

Within the summarised financial information for 2013 are the following amounts in respect of APN: gross assets of €812.0m (2012: €1,019.1m); gross liabilities of €416.7m (2012: €555.4m); Group's share of associates' revenues of €178.6m (2012: €211.5m); and Group's share of associates' profits after tax of €0.3m (2012: Groups share of associates' losses after tax of €150.3m).

The fair value of the Group's interests in associates, which are stock exchange quoted as at 31 December 2013, was €55.8m (2012: €37.7m), all of which relates to APN (see note 6 for further information).

(iii) Joint Ventures

Summarised financial information in respect of the Group's share of its joint ventures is set out below:

11. Share Capital and Share Premium

NOTES TO THE FINANCIAL INFORMATION (continued)

11. Share Capital and Share Premium (continued)

The movement in the number of issued and fully paid ordinary shares during the year was as follows: