Interim Results

INTERIM RESULTS FOR THE 26 WEEKS ENDED 2 JULY 2011

Johnston Press plc, one of the leading community media groups in the UK and Ireland, announces interim results for the 26 weeks ended 2 July 2011.

·; Revenues

§ Total revenue down 7.5% to £191.8m

§ Total advertising revenues decreased by 10.0% year on year, with employment revenues continuing to contribute most to the decline in print and digital, but offset by growth in national display advertising

§ Circulation revenues continue to be resilient, down only 1.8% on the first half of 2010

§ Digital revenues down 5.0%, but with an improving trend from -9.7% in Q1 to -1.5% year on year in Q2, reflecting the benefit of the successful launch of the Find it business directory in March 2011

·; Costs

§ Total costs for the first 26 weeks of 2010 were reduced by £8.3m compared with the same period in 2010, despite a £4.2m impact of newsprint prices

·; Operating profit

§ Operating profit before non-recurring items(1) of £33.3m reflects the significant cost savings above

§ Operating margin 17.4% (2010: 19.5%) similarly reflects tight operational control notwithstanding the difficult trading environment

·; Continued debt reduction

§ Net debt reduced by £16.0m since the start of the year to £370.7m

§ Facility reduction of £20.0m scheduled for 30 June 2012 was brought forward to 30 April 2011 by the Group

·; Two new digital partnerships with Zoopla for online property and Nimble Commerce for online vouchers

·; New Chief Executive Officer, Ashley Highfield, to join the Group on 1 November 2011

SUMMARY AND OUTLOOK

Commenting on these results, John Fry, Chief Executive Officer of Johnston Press plc said:

"The Group achieved an operating profit before non-recurring items of £33.3m despite the challenging UK economic environment of the first half of 2011, down 17.6% on the first half of 2010. This was achieved by tight operational control, with further cost reductions of £8.3m resulting from new processes and an increased centralisation of back office functions. Operating cash flow within the Group remains strong, with a further debt reduction of £16.0m achieved in the first half of 2011.

We remain cautious about the advertising outlook for the second half of the year, with total advertising revenues in the first seven weeks down 8.1%. Digital revenues, which returned to year-on-year growth in May, have continued to grow in the second half with the first seven weeks up 6.8% compared to the same period in 2010. We are also delighted to be able to announce the new digital partnerships with Zoopla and Nimble which will enable a significant enhancement of our property website and the launch of a new online vouchers business in the autumn. The Board has confidence that, in the absence of a further significant deterioration in the UK economy, the outcome for the Group in 2011 will be broadly in line with current expectations."

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(1) Non-recurring items includes IAS 21/39 adjustments

Johnston Press plc

Chief Executive's Half Year Statement

The Group achieved an operating profit (before non-recurring and IAS 21/39 items) of £33.3 million despite the challenging UK economic environment of the first half of 2011, down 17.6% on the first half of 2010.

Display revenues continue to perform relatively well and are proving resilient. However, the deterioration of employment print advertising revenues has resulted in the year-on-year total revenue decline of -7.5% in the current period. Digital revenues were down 5.0% in the first half with online trading being impacted by the difficult employment conditions and resultant reduced up-sell from the printed product. Conversely, digital display revenues have performed well and the Find it business directory offering has shown strong growth since its launch in March. Performance in these areas in particular has reversed the year-on-year declines seen in digital in the first quarter to increasing levels of growth in May and June.

We are delighted to announce two new digital partnerships with Zoopla and Nimble Commerce, for property and online vouchers respectively. Zoopla will replace our in-house developed property website and provide a much enhanced experience for our viewers and greater audience response for advertisers. Our partnership with Nimble Commerce takes the Group into the rapidly growing vouchers market. As we possess unique access to both local audiences and advertisers we believe the Group is well placed to source deals for local consumers. A launch under the Deal Monster brand is planned for the last quarter of this year.

The Group has continued to make cost reductions with an element from a reduction in full time equivalent headcount, down from 5,228 at the start of the period to 5,049 at the half year. Total costs (before non-recurring and IAS 21/39 items) in the period were £8.3 million less than the first half of 2010, despite significant increases in newsprint price costing the Group an additional £4.2 million year-on-year.

The Group's operating cashflow remains strong supported by tight control of working capital and low capital expenditure. This enabled net debt to be reduced by £16.0 million over the period to £370.7 million. The reduction in debt remains a focus for the Group and costs continue to be closely managed.

Earnings per share (EPS) before non-recurring and IAS 21/39 items were 1.84p (2010: 2.22p). The reduction in EPS reflects the difficult trading conditions in the first half of 2011 and the increase in newsprint cost.

In order to preserve cash and continue to reduce net debt, no interim ordinary dividend has been proposed.

Outlook

We continue to be cautious about the advertising outlook for the second half of the year with total print advertising revenues in the first seven weeks down 8.1%. The rate of decline in print employment revenues is reducing as the 2010 comparables reflect the fall off in this category which started in the second half of last year.

Digital revenues, which returned to year-on-year growth in May, have continued to grow in the second half with the first seven weeks showing an increase of 6.8% on the same period in 2010. Circulation revenues continue to perform well.

Operating cash flow within the Group remains strong with further cost savings and debt reduction achieved. We will be commencing the process of refinancing our borrowings in the second half of the year with a view to completing this in the first quarter of 2012. Our current facilities are due to expire in September 2012.

In the absence of a further deterioration in the UK economy, the Board is confident that the outcome for the Group in 2011 will be in line with current expectations.

Business Environment and the Market Place

Our advertising revenues are dependent on the strength of the economy in the markets we serve and are impacted immediately by any changes. Since the UK election in May 2010 there has been a considerable fall in public sector activity which now represents only 7.4% of print advertising against 10.1% in the first half of last year. Much of this reduction has been in employment revenue. In addition there was a slowdown in private sector activity towards the end of 2010 which has continued into this year. Those advertising categories involving discretionary purchases have declined as consumers have concentrated spending on essential items. Consequently we have seen reductions in property (-7.7%) and motors (-8.1%) during the period.

The migration from print advertising to digital alternatives continues. Classified advertising has largely migrated over the past 7 years such that our focus is now on display advertising and classified categories with display-like characteristics. This would include property where agents are competing for instructions and motors where dealers compete for consumer attention. The most vulnerable categories have now largely migrated to digital alternatives.

Our portfolio is weighted towards weekly titles which continue to outperform daily newspapers in terms of both circulation and advertising revenue. We expect these trends to continue.

Trading Review and Summary Performance

Total revenue in the first half of 2011 was £191.8 million compared to £207.3 million in 2010.

Within this, print advertising was the most difficult revenue stream; in terms of its rate of decline, employment continued to be challenging and was down 34.7% in the first half of 2011. However, this category represented less than 10% of total print advertising revenue in the period and will therefore have less of an impact going forward than it has historically.

By contrast, display revenues continued to perform relatively well despite the difficult economic conditions with national display revenues up 2.8% year-on-year.

Differences in performance between the geographical regions have continued into the first half of 2011 with revenue declines in Scotland and the North of England being larger than those in the South and Midlands. The economic environment in the Republic of Ireland continues to be challenging although the print advertising revenue decline in the first half reduced to 18.2% (from 29.0% in the first half of 2010).

Table 1 - Summary Group Operating Statement

* Before non-recurring and IAS 21/39 items

Newspaper sales revenues were down 1.8% on the comparable period in 2010. Circulations of paid-for newspapers declined by an average of 7.8% for our dailies and 6.8% for the weeklies.

Digital revenues declined by 5.0% in the period. The first quarter in particular was impacted by the reduced up-sell of employment advertising from the printed product with total digital revenues declining by 9.7% in that period. Performance improved in the second quarter with the year-on-year declines reducing to -1.5% as the newly launched Find it business directory and customer review product gained traction. The Group has seen year-on-year growth in online display in the first half which has also countered the performance of employment advertising. As noted previously, the Group's digital revenues overall experienced year-on-year growth in both May and June.

We are excited by the announcement of our new partnerships with Zoopla and Nimble Commerce, both already commented on in this Statement, and the additional revenue opportunities and enhanced customer experience that they will bring.

Contract printing revenues of £14.0 million were in line with the prior year. The Group has been successful in replacing contracts lost with new business and in passing on newsprint price increases to those customers for whom we supply newsprint. The Group undertakes printing for News International but we do not anticipate that there will be a material financial impact from the closure of the News of the World.

Other revenues were £1.3 million (12.9%) down year-on-year reflecting a reduction in the volume of leaflets carried by the Group's free newspapers.

Costs continue to be managed carefully and have decreased by £8.3 million compared to the same period in 2010. This is net of a significant increase in the price of newsprint. Cost of sales has decreased by £3.9 million on the prior year, which was realised through newsprint volume management and continued restructuring programmes in both pre-press and printing.

Operating expenses (before non-recurring and IAS 21/39 items) have reduced by £4.4 million in the 26 weeks to 2 July 2011 through continued rationalisation of back office functions and management restructuring.

The operating profit margin (before non-recurring and IAS 21/39 items) for the 26 week period was 17.4% compared to 19.5% in the first half of 2010. Operating profit before non-recurring and IAS 21/39 items at £33.3 million, was £7.1 million lower than 2010.

Net non-recurring costs of £0.7 million were incurred in the first half of the year. This figure is the net of restructuring and redundancy costs of £2.6 million and a credit of £1.9 million resulting from the pension increase exchange exercise carried out in the period (see the pension section later in this Statement).

In the first half, the Group generated an operating profit (after non-recurring items) of £32.6 million compared to £44.0 million in the same period in 2010. This decrease reflects the difficult economic trading environment adversely impacting print advertising revenues and a significant newsprint price increase, partially offset by continued cost management driving savings from the operation, focussing on production efficiencies and rationalising back office functions.

The key elements impacting the Group's results at a profit before tax level are finance costs and the impact of IAS 21/39 items.

Finance costs are shown in the table below. These have decreased on the prior year due to the reduction in the Group's net debt, the impact of new interest rate swaps and the reduction in margin payable on the facility, with a partial offset being the increase in the rate of PIK accrual under the terms of the Group's finance agreement.

Table 2 - Finance Costs

During the period, there was also a net charge of £1.2 million in relation to IAS 21/39, the equivalent figure in the first half of 2010 being a net credit of £3.3 million. The main factor driving this £4.5 million swing is the retranslation of the Group's Euro debt which was a loss of £0.7 million in the current period compared to a gain of £3.3 million last year. Since the 2010 half year, the Group has taken steps to reduce its exposure to fluctuations in the Euro: Sterling exchange rate by reducing its level of Euro borrowings to €15.0 million in the second half of 2010 (equivalent to £13.5 million at the current period end rate).

The Group's profit before tax for the period was £13.8 million, a decrease of £12.4 million on the level reported at 3 July 2010.

Cash Flow/Net Debt

The Group's net debt at 2 July 2011 was £370.7 million, a reduction of £16.0 million from the start of the year. As a result of the Group's strong operating cash flow, we accelerated the facility reduction scheduled for 30 June 2012 to 30 April 2011, leading to reduced finance costs payable to the end of the year. All scheduled reductions of the facilities have now been made with our current facilities due to expire in September 2012.

The reduction in net debt was achieved despite this being a period of seasonal adverse movements in working capital, in particular trade debtors, and higher outflows for newsprint purchases in order to secure additional volumes prior to a further price increase effective for the second half. The Group maintains a tight control of capital expenditure; in the first half, only £0.6 million was spent with proceeds received from disposals being £0.7 million. Interest paid in the first half was £13.3 million, down 17.3% on the same period in 2010 and reflecting the reduction in net debt over the period.

The Group has undertaken a recent and thorough review of its forecasts and associated risks. These forecasts extend for a period beyond one year from the date of approval of these interim financial statements. This review recognised the on-going economic uncertainty, the continued caution seen in advertising experienced across the publishing and media sectors and the relative stabilisation of the year-on-year declines. The forecasts make key assumptions, based on information available to the Directors, around:

• Future advertising revenues, which are consistent with current external economic forecasts and existing advertising trends;

• Continued cost reduction measures reflecting the decrease in Group revenues; and

• The projected interest costs over the period of the current financing arrangements.

Based on the forecasts and taking account of reasonably possible changes in trading performance, as well as additional mitigating cost savings that are within the Group's control, the Directors have a reasonable expectation that the Group will continue to operate within the terms of its existing financial arrangements and will have adequate resources to continue in operational existence for the forseeable future. Thus the Group continues to adopt the going concern basis of accounting in preparing the interim financial statements.

Pension Fund

The IAS 19 valuation at the half year returned a deficit of £51.2 million, an improvement of £9.6 million on the position at the start of the year. This decrease is due to a 0.1% increase in the discount rate which has reduced the scheme liabilities and a £1.9 million reduction in liabilities as a result of a pension increase exchange exercise. The latter was an offer made by the Company to a number of pensioner members to exchange some of their future pension increases for a one-off increase in pension where the new uplifted amount would no longer be eligible for increases in payment. The credit of £1.9 million has been included in the Group Income Statement as a non-recurring item.

The Trustees are currently in the process of completing the triennial valuation of the pension fund reflecting the funding position at 31 December 2010.

Business Risks

The 2010 Annual Report and Accounts described in detail the principal risks faced by the business. In particular, we are affected by the general economic conditions of the markets in which we operate, these conditions remaining uncertain and out-with our control. Such factors include changes in gross domestic product (GDP), the level of property transactions, the volume of new car sales and the level of unemployment. The results of the Group are also impacted by the public sector and recent spending cuts have resulted in reductions in employment and other classifieds in particular. Consumer confidence remains low throughout the United Kingdom and Republic of Ireland and concerns continue over a further downturn in economic performance in the UK and the level of future GDP growth.

The Annual Report highlighted a number of areas where the Group was taking steps to mitigate identified risks and we continue to address these.

We are strengthening our digital offering by adding to the newly launched Find it business directory with an improved property offering through partnership with Zoopla and utilising software from Nimble Commerce to launch our own vouchers business. Both these revenue streams are enabled by the rollout of our upgraded news websites which was predominantly completed last year. Similar work has continued to support newspaper circulations through focus on high quality products.

The Group maintains a policy of tight cost management and seeks to mitigate the impact, wherever possible, of upwards inflationary pressures. This includes managing volumes of newsprint and seeking production efficiencies with the aim of reducing waste, amongst other measures.

Our unique local position continues to allow us to offer advertisers high levels of local market penetration and our challenge is to improve our ability to monetise this. The Group's dependence on classified advertising has reduced significantly with display advertising (and property advertising which appears to have display-like characteristics) remaining relatively stable. However, there remains the risk of further structural change to advertising platforms and continued circulation declines.

Board Changes

As discussed in the commentary in our 2010 Annual Report and Accounts, Stuart Paterson stepped down from the Board on 15 March 2011 and was succeeded as Chief Financial Officer by Grant Murray on 3 May 2011.

Following the notification of my intention to step down from my role by March 2012, I will stand down as Chief Executive Officer and as a Director of Johnston Press on 31 October 2011.

The Group announced on 28 July 2011 that Ashley Highfield will join as Chief Executive Officer and as a Director with effect from 1 November 2011 and I would like to wish him and the Group every success for the future.

John Fry

Chief Executive Officer

25 August 2011

Responsibility Statement

We confirm to the best of our knowledge:

a) The condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';

b) The Chief Executive's Half Year Statement includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first 26 weeks and description of the principal risks and uncertainties for the remaining 26 weeks of the financial year); and

c) The Chief Executive's Half Year Statement includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

By Order of the Board

John Fry Grant Murray

Chief Executive Officer Chief Financial Officer

25 August 2011 25 August 2011

Independent Review Report To Johnston Press Plc

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 26 weeks to 2 July 2011 which comprises the Group Income Statement, the Group Statement of Comprehensive Income, the Group Reconciliation of Shareholders' Equity, the Group Statement of Financial Position, the Group Statement of Cash Flows and the related notes 1 to 16. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 26 weeks to 2 July 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

Edinburgh

25 August 2011

Group Income Statement (unaudited)

26 Weeks to 2 July 2011

All of the revenue and profit/(loss) above is derived from continuing operations.

Group Statement of Comprehensive Income (unaudited)

26 Weeks to 2 July 2011

Group Statement of Comprehensive Income (unaudited)

26 Weeks to 3 July 2010

Group Reconciliation of Shareholders' Equity (unaudited)

26 Weeks to 2 July 2011

Group Reconciliation of Shareholders' Equity (unaudited)

26 Weeks to 3 July 2010

Group Statement of Financial Position (unaudited)

At 2 July 2011

Group Statement of Cash Flows (unaudited)

26 Weeks to 2 July 2011

Notes to the Interim Financial Information (unaudited)

1. General Information

The condensed financial information for the 26 weeks to 2 July 2011 does not constitute statutory accounts for the purposes of Section 434 of the Companies Act 2006 and has not been audited. No statutory accounts for the period have been delivered to the Registrar of Companies. This half-yearly financial report constitutes a dissemination announcement in accordance with Section 6.3 of the Disclosure and Transparency Rules.

The condensed financial information in respect of the 52 weeks ended 1 January 2011 has been produced using extracts from the statutory accounts for this period. Consequently, this does not constitute the statutory information (as defined in section 434 of the Companies Act 2006) for the 52 weeks ended 1 January 2011, which was audited. The statutory accounts for this period have been filed with the Registrar of Companies. The auditors' report was unqualified and did not contain a statement under Sections 498 (2) or 498 (3) of the Companies Act 2006.

The next annual financial statements of the Group for the 52 weeks to 31 December 2011 will be prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS"). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting'. The financial information in this Interim Report has been prepared in accordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the Listing Rules. The auditors have reviewed the financial information in this Interim Report and their report is set out on page 7.

The Interim Report was approved by the Directors on 25 August 2011 and is being made available to shareholders on the same date on the Company's website at www.johnstonpress.co.uk.

2. Accounting Policies

Basis of preparation

The interim financial information has been prepared on the historical cost basis, except for the revaluation of certain properties and financial instruments.

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief Executive's Half Year Statement. This statement also includes a summary of the Group's financial position, its cash flows and borrowing facilities.

Overall, the Directors believe the Group is well placed to manage its business risks successfully despite the ongoing uncertain economic outlook. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current committed facilities.

After making reasonable enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed financial information.

Basis of accounting

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest audited annual financial statements.

Critical judgements in applying the Group's accounting policies

In applying the entity's accounting policies, management has made certain judgements in respect of the identification of intangible assets based on forecasts and market analysis. The valuation of intangible assets is reviewed for impairment annually or more frequently if necessary. These judgements have the most significant effect on the amounts recognised in the Group's interim financial information.

Key sources of estimation uncertainty

The significant assumptions concerning the key sources of estimation uncertainty at the reporting date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year have been consistently applied to all the periods presented and are set out in the Group's annual consolidated financial statements.

Notes to the Interim Financial Information (unaudited)

continued

3. Business Segments

Information reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance is focused on the two operating segments of Newspaper Publishing (in print and online) and Contract Printing. These are the only two operating segments of the Group.

a) Segment revenues and results

Inter-segment sales are charged on an arm's length basis.

The accounting policies of the reportable segments are the same as the Group's accounting policies described in the Group's annual consolidated financial statements for the 52 weeks to 1 January 2011. Segment result represents the profit earned by each segment without allocation of the share of results of associates, investment income, finance costs (including in relation to pension assets and liabilities) and income tax expense. This is the measure reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance.

The Group, in common with the rest of the publishing industry, is subject to the main holiday periods of Easter, summer and Christmas. Since these fall across both half years, the Group's financial results are not usually subject to significant seasonal variations.

Notes to the Interim Financial Information (unaudited)

continued

3. Business Segments (continued)

a) Segment revenues and results (continued)

b) Segment assets

For the purposes of monitoring segment performance and allocating resources between segments, the Group's Chief Executive monitors the tangible, intangible and financial assets attributable to each segment. All assets are allocated to reportable segments with the exception of available-for-sale investments and derivative financial instruments.

Notes to the Interim Financial Information (unaudited)

continued

3. Business Segments (continued)

c) Other segment information

4. Non-Recurring Items

Non-recurring items within operating expenses are:

* In the 52 weeks ended 1 January 2011, this figure included £1.5 million relating to a provision for the remaining

term of the leased property in Limerick following closure of that operation.

5. Investment Income

Notes to the Interim Financial Information (unaudited)

continued

6. Finance Costs

a) Net finance income on pension assets/liabilities

7. Tax

The tax (credit)/charge comprises

The basic rate tax applied for the 2011 period of 26.5% was a blended rate due to the tax rate of 28% in effect for the first quarter of 2011, changing to 26% from 1 April 2011 under the 2011 Finance Act.

Corporation tax for the interim period is credited at 38.0% (3 July 2010: charged at 2.3%).

The Group estimates that the future rate changes to 23% would reduce its UK actual deferred tax liability provided at 2 July 2011 by £27.3• million, however the impact will be dependent on our deferred tax position at that time.

Notes to the Interim Financial Information (unaudited)

continued

8. Earnings Per Share

Underlying figures are presented to show the effect of excluding non-recurring items and IAS 21/39 adjustments from earnings per share.

Diluted earnings per share are presented when a company could be called upon to issue shares that would decrease net profit or increase loss per share. Exercising out of the money options would have the effect of reducing the profit per share; as a result no adjustment has been made in the period to the diluted profit per share.

In the comparative 52 week period, the basic earnings per share was adversely affected by the non-recurring charge for the impairment of intangible assets. This had no impact on the underlying earnings per share calculation.

Notes to the Interim Financial Information (unaudited)

continued

9. Dividends

The Board has decided to pay no interim dividend. There were no dividends proposed but not paid or included in the accounting records in either of the comparative periods shown.

10. Intangible Assets

Notes to the Interim Financial Information (unaudited)

continued

10. Intangible Assets (continued)

The carrying value of publishing titles by cash generating unit (CGU) is as follows:

The Group tests goodwill and publishing titles for impairment annually, or more frequently if there are indications that they might be impaired.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. These assumptions have been revised in the current period in light of the continued recession in the UK and Republic of Ireland. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The discount rate applied to future cash flows in the current period is 8.94% (1 January 2011: 8.94%). Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market.

The Group has prepared discounted cash flow forecasts in the current period derived from the most recent financial forecasts approved by management for the next five years and extrapolated cash flows for 15 years thereafter. The long term growth rate used is 1.0% pa. A discounted residual value of 5 times the final year's cashflow is included in the forecast. The present value of the cash flows is then compared to the carrying value of the asset.

During the period, a net £nil impairment of publishing titles has been charged, this being the net of additional impairment of £20.8 million in Scotland, the Northwest and Republic of Ireland offset by reversals of past impairment in each of the other CGUs.

11. Derivative Financial Instruments

Derivatives that are carried at fair value are as follows:

Notes to the Interim Financial Information (unaudited)

continued

12. Borrowings

Under the terms of the Group's finance agreement, committed reductions of the facilities were due in 6 monthly intervals from 30 June 2010. However, the June 2012 reduction was accelerated by the Group to 30 April 2011. There are no more scheduled reductions under the remaining term of the facility until its maturity in September 2012.

Notes to the Interim Financial Information (unaudited)

continued

13. Retirement Benefit Obligation

The valuation of the Group's pension scheme is updated at the end of each accounting year and at the half-year. Full details of the valuation at 1 January 2011 are outlined in the financial statements to that date. The major assumptions and disclosures for the 26 weeks to 2 July 2011, the 26 weeks to 3 July 2010 and the 52 weeks to 1 January 2011 are as follows:

Major assumptions: