Interim results for 26 weeks ended 30 June 2012

21 August 2012

Johnston Press plc

Interim results for the 26 weeks ended 30 June 2012

Johnston Press plc, one of the leading community media groups in the UK and Ireland, announces interim results for the 26 weeks ended 30 June 2012.

Key Highlights:

The first half of 2012 was a period of tremendous activity for Johnston Press making good progress against all of the key elements of its new strategy. Against a difficult trading environment in the period, the Group achieved an operating profit (before non-recurring items) of £30.4m and an operating margin of 17.3% (2011: £33.3m and 17.4% respectively) on revenues of £176.1m[1]. Progress on key elements of the strategy included:

·; Achieving cost leadership and stabilisation of the core print business

- Reduced costs by £12.8m (8.1%)1compared with the first half of 2011

- Savings have been achieved across the business and include a consolidation of printing activities and a simplification of the management structure

- Group remains confident of achieving its full year cost savings target of £25.0m

·; Re-launching all titles in 2012

- Re-launched the first 23 of our titles in the first half

- Successful implementation of first phase and encouraging results achieved

- On track for rolling out the remainder of our close to 250 titles by the end of 2012

·; Accelerating existing digital strategies

- Digital local display and property revenues have grown period-on-period by 43.8% and 25.2% albeit from a low base

- Increase in audiences, particularly to mobile platforms, with monthly visitors up 100% since December 2011

- Overall digital revenue grew to £10.3m but this growth was constrained by the knock on effect of subdued print employment activity on the digital recruitment product revenue

·; Creating new verticals

- New verticals around entertainment listings and services to small and medium enterprises (SMEs) now under development with pilots expected later this year

- Integrated employment offering across print and digital with more value added services to be introduced in the second half

The application of its substantial operational cash flow to reducing its borrowings remains a key priority for the Group. The net debt at 30 June 2012 of £361.7m included the impact of one-off cash costs in the period relating to refinancing fees (£11.4m) and restructurings (£7.8m). If it were not for these items, the Group's operating cash flow would have reduced net debt to below the £351.7m at the start of the year. In addition, since the half year, the previously announced receipt of £30m from News International has reduced net debt still further. At 31 July, the Group's net debt was £332.1m.

The Board has confidence that, in the absence of a further deterioration in the UK economy, the outcome for the Group in 2012 will be in line with current expectations.

Commenting on these results, Ashley Highfield, Chief Executive Officer of Johnston Press plc said:

"The first half has been a period of tremendous activity and we have made significant progress. Johnston Press is going through a strategic transformation. As we continue to develop our digital portfolio, refresh our print offering, reduce costs, and use our substantial operating cash flow to bring down our debt, we are increasingly confident about the success of the strategy and the benefits that it will deliver."

For further information please contact:

Ashley Highfield, CEO 020 7466 5000 (today), or

Grant Murray CFO 0131 225 3361 (thereafter)

Buchanan 020 7 466 5000

Richard Oldworth/ Louise Hadcocks

Forward-looking Statements

This interim report contains forward-looking statements. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.

The Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Johnston Press plc

Chief Executive's Half Year Statement

The first half of 2012 was a period of tremendous activity within the Group as we started to implement the new strategy. We believe that all parts of the new strategy are well on-track, notwithstanding that the UK economy has presented some additional challenges in the period.

The key elements of this new strategy were set out at the time of the 2011 results announcement:

1) Achieve cost leadership and stabilisation of print revenues

2) Re-launch of all titles during 2012 (to enhance circulation volumes and revenues)

3) Accelerate existing digital strategies

4) Create new business verticals from the aggregation of niche content across the Group

During the period, the Group achieved an operating profit of £30.4 million and an operating margin of 17.3% (2011: £33.3 million and 17.4% respectively). While total revenues (before non-recurring and IAS 21/39 items) in the period reduced to £176.1 million (from £191.8 million in 2011) in difficult trading conditions, this was mitigated by period-by-period savings in the first half of £12.8 million. The operating profit (after non-recurring and IAS 21/39 items) of £37.8 million represents a £5.2 million increase on the same period in 2011.

Strategic actions taken in the first six months of the year included:

• The successful re-launch of the first 23 of our titles (with the remainder of our portfolio of almost 250 titles scheduled for re-launch before the end of the year);

• The conversion of five of our daily titles into weekly newspapers increasing the average circulation and of each print run;

• Increased focus on the development of our digital businesses (with our digital local display and digital property businesses growing by 43.8% and 25.2% respectively in the period, albeit from a low revenue base) and a dramatic increase in mobile audiences period-on-period;

• Development commenced of new verticals around entertainment listings, services for small and medium sized enterprises (SME's), and a new integrated employment vertical which we anticipate will pilot in the second half of the year;

• A rationalisation and simplification of our divisional management structure; and

• A consolidation of our printing activities into our most efficient facilities (with the closure of three older print sites).

Johnston Press is committed to transforming its business to appeal to a new online audience whilst refreshing its print titles to continue to appeal to its heartland readership. In this integrated print/digital world, we believe we are the true home of 'local, social, mobile' and our trusted brands (across paid-for print and online) have increased their reach in the last year by 26.0%, with growth in online and in mobile substantially exceeding the relatively small decline in print reach. This provides us with further opportunities to monetise this platform in the future.

We aim to be the principal source of local news (the majority of our weekly papers still being a trusted brand that reaches more than 50% of their local community) and #1 destination for SMEs across all our geographies - relationships that we intend to strategically build on as we migrate ever more into the digital world. Evidence of the progress of this strategy is the growth of our mobile audience, up 100% since December 2011 and the launch of iPad apps for 7 of our titles, the Scotsman app having already been downloaded 20,000 times in H1.

We have also accelerated the pace of cost savings across all areas of the Group, with particular emphasis on efficiency gains through improvements in processes and securing maximum benefit from existing and new technology and infrastructure. The implementation of our contact centre consolidation during the first half of 2012 - reducing the number of contact centres from 14 to 2 - is a good example: we have been able to reduce costs significantly while introducing enhanced technology and contributing to the implementation of the sales effectiveness strategy. As we anticipated, such a significant change has had some minor operational impact during the implementation phase, but this was more than justified by the cost savings and future benefits that the change will provide.

Total costs (before non-recurring and IAS 21/39 items) in the period were £12.8 million (8.1%) lower than for the first half of 2011. These savings have been achieved through the simplification of our management structure, the consolidation of our print activities into our most efficient facilities, exiting not fit for purpose offices and changes to processes and ways of working across our sales function, all of which have enabled us to maintain margins despite the extremely tough economic conditions we have encountered. The Group's cost saving target for 2012 was set at £25.0 million. With the progress made in the first half and further cost saving planned in the second half (including a deferral of any salary increases into 2013), we are well on track to achieve these savings.

The first half of the year also saw the completion of the refinancing of our borrowing facilities, which are now in place through to September 2015. The Group's strong operating cash flows continue to be primarily applied in driving down the level of net debt as quickly as possible, although in the first half of 2012 the net debt position was impacted by fees associated with the refinancing (£11.4 million) and a significant level of cash reorganisation costs (£7.8 million).

At the end of the period, the Group agreed to release News International from part of its contractual printing commitments in return for a compensation payment of £30.0 million. The compensation payment, received in early July, went to reduce net debt further and, as at 31 July 2012, net debt was £332.1 million.

As reported previously, our new financing arrangements include significant incentives in the event that the Group were to fully repay its loan facilities prior to 31 December 2014. The receipt from News International and the positive future impact on cash flow resulting from the cost saving initiatives which have been implemented in the first half assist us in continuing to make progress in achieving this target.

Earnings per share (EPS) before non-recurring and IAS 21/39 items were 2.09p (2011: 1.84p).

No interim ordinary dividend has been proposed.

In just a few months there has been a huge amount of activity and effort in shifting the strategic direction of the Group and the response and commitment of staff has been a key factor in the progress so far. As we stated earlier this year, the activity and effort to date will be more fully reflected in the results in the second half of 2012 and especially into 2013 when the full benefit of the title re-launches (and cover price increases) and the roll-out of the new websites is expected to be realised.

As part of the transformational changes within the Group, we are extending our programme of ensuring that all staff have the relevant equipment, software, accommodation and training that they require to deliver their best performance. This programme, which has already started with the equipping of over 1,000 sales staff with iPads and Salesforce.com software, is being extended to our editorial teams, with the aim of providing all staff with enhanced tools and a better working environment by the end of 2013.

Outlook

As well as the challenging economic environment, the beginning of the second half of this year has been dominated by the coverage of the Olympic Games and the advertising market has reflected this. Total advertising revenues in the first six weeks was down 14.7%, although the strong growth in digital display and online property revenues continued into the second half of the year, with digital revenues in these areas growing strongly albeit from a low revenue base.

With the refinancing of our borrowings completed, the Group remains focused on reducing its net debt. With significant additional cost savings to come in the second half and substantial operating cash flow we have a clear route to further debt reduction over the second half of the year. As explained above, the £30.0 million receipt from News International has further reduced net debt levels in the second half.

In the absence of a further deterioration in the UK economy, the Board is confident that the outcome for the Group in 2012 will be in line with current expectations.

Trading Review and Summary Performance

Total revenue (before non-recurring items) in the first half of 2012 was £176.1 million compared to £191.8 million in 2011.

The table below sets out the summarised Group operating statement:

Table 1 - Group Summary Operating Statement

*Before non-recurring and IAS 21/39 items

Within print advertising, classified print advertising continued to be the main contributor to the overall revenue decline in the first half.

Although affected by the economic environment, print display (down 10.9%) continued to perform relatively well. Local display revenues in particular remain robust but, in line with the trend seen elsewhere, the performance of national display was weaker and was specifically affected by the lower level of digital switchover advertising in our regions than in 2011.

Operating performance was broadly similar across the geographies in which the Group operates. During the period the Group simplified its operating structure moving to a single layer of management across its publishing units. The Group is already seeing the benefits of this change in the form of greater co-operation and co-ordination between the newly formed units and the rapid adoption of best practice, all enabling enhanced revenue performance. At the same time further centralisation in the period, most notably of outbound selling activity, has reduced the associated cost.

Newspaper sales revenues were down 3.1% in the first half of the year. However, this includes the impact of the five daily to weekly changes in May. Excluding these the amount of the revenue decline reduces to just 2.4%. The circulation revenues in the period were also affected by some price increases being held off in advance of the title re-launch programme.

Digital revenues grew by 8.4% in the period. Within this, online employment revenues grew by 3.0% in spite of the declines within the print employment revenues and the consequential impact on the upsell to digital. The balance of digital revenues grew by 12.3%, and within this local online display and digital property revenues grew by 43.8% and 25.2% respectively.

The growth in local online display reflects the success of our Easy Online advertising initiative which facilitates the simple creation of effective print and online packages for advertisers. The growth in digital property advertising reflects the launch of our new property site in the spring, in partnership with Zoopla. These revenue increases were partially offset by declines in digital motors revenues and national digital display. We are confident that the new joint venture with motors.co.uk (whose new parent also owns the leading US classified motor site, Autotrader.com), will improve the performance of the digital motors category going forward. We have also strengthened our commercial management team further to focus on top line growth, especially national display, with a particular emphasis on national digital display.

Contract print revenues in the first half of the year were down 10.0%. This reduction relates primarily to a very competitive market and pressure on margins. As noted above, at the end of June, the Group agreed to release News International from part of its contractual printing commitments at the end of the period in return for a compensation payment of £30.0 million. This did not have an impact in the first half of the year but will reduce contract printing revenues in the second half of the year. The impact of this lost revenue will be offset by bringing some external printing of our own titles in-house and the resultant interest saving on reduced Group borrowings. In addition, we are seeking to resell this high quality capacity and have commenced discussions with interested parties.

Other revenues were up £0.3 million period-on-period primarily due to increases in syndication and enterprise revenues partially offset by declines in leaflet revenues.

Costs have been actively managed during the period and have reduced by £12.8 million on the same period in 2011 (before non-recurring items and IAS 21/39 adjustments). As highlighted above, these savings have been achieved through us simplifying our management structure, the consolidation of our print activities into our most efficient facilities, exiting not fit for purpose offices and changes to processes and ways of working across our sales function.

With the vast majority of our planned cost saving initiatives for 2012 now commenced, we are highly confident that we will achieve our cost savings target of £25.0 million for the full year.

The tight management of costs has allowed us to keep the Group's operating margin at a near stable level. The operating margin(before non-recurring and IAS 21/39 items) for the 26 weeks to 30 June was 17.3% compared with 17.4% in the first half of 2011.

A significant net non-recurring gain of £7.4 million was recognised in the first half of the year. As explained above, the Group received £30.0 million from News International in compensation for the reduction in its contractual commitment to receive printing services from the Group. Offsetting this revenue, there were write-downs in the value of the press at Peterborough in relation to the closure of the print facilities (£13.3 million), together with other restructuring costs (including redundancy costs) of £10.8 million. The Group also recognised a credit of £1.5 million in respect of past service gains arising on the take up of pension exchange schemes (see below).

In the first half the Group generated an operating profit (after non-recurring and IAS 21/39 items) of £37.8 million. This compares with £32.6 million in the same period in 2011, with the increase being due to the net non-recurring gain.

The Group's profit before tax was £13.6 million, a decrease of £0.2 million on the level reported in respect of the first half of 2011. The profit before tax is influenced by the level of finance costs and the impact of IAS 21/39 items.

Finance costs are shown in the table below. These have increased on the prior year due to the terms of the refinancing and in particular the revised rate of PIK accruing on the facilities. The facilities include provisions that would reduce the amount of the PIK payable below that shown in the event of an early repayment of the facilities prior to 31 December 2014.

Table 2 - Finance Costs

During the period there was a net charge of £1.9 million in relation to IAS 21/39 adjustments; being the net of the movements on retranslation of our US dollar and Euro denominated borrowings and on our hedging arrangements. The equivalent figure for the first half of 2011 was a net charge of £1.2 million.

Cash Flow / Net Debt

The Group's net debt at 30 June 2012 was £361.7 million. This was after fees associated with the refinancing and the reorganisation costs in the first half of the year.

The Group continues to maintain a tight control of capital expenditure with £2.2 million spent in the first half offset by £0.9 million received from non-essential asset sales. Interest paid in the first half was £13.6 million, an increase of 2.5% on the same period in 2012.

Net Asset Position

At the period end, the Group had net assets of £298.8 million, an increase of £14.4 million on the position at 31 December 2011.

Going Concern

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. The 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 period-on-period declines. The forecast makes 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;

• The impact of newspaper cover price increases on circulation revenues;

• Increased cost reduction measures; and

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

Based on the forecasts and taking account of reasonable possible changes in trading performance, as well as the additional mitigating cost savings that are within the Group's control, the Directors have a reasonable expectation that the Group will continue to trade within the terms of its existing financial arrangements and will have adequate resources to continue in operational existence for the foreseeable 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 £102.2 million. This represents a decrease of £1.8 million since the start of the year. This decrease is the net effect of a 0.05% reduction in the discount rate which has increased the schemes liabilities, offset by a 0.2% reduction in inflation assumptions which reduced the liabilities. There was also a £1.5 million reduction in pension liabilities as a result of pension exchange exercises. The latter related to offers made to a number of pensioner members to exchange some of their future pension increases for a one-off increase in pension, where the uplifted amount would no longer be eligible for increase in payment. The credit of £1.5 million has been included within the Group Income Statement as a non-recurring item.

During the first half of the year the Trustees completed the triennial valuation of the pension fund reflecting the funding position at 31 December 2010. With effect from 1 June 2012 the Company has increased its contributions to the scheme from £2.2 million to £5.7 million a year.

Business Risks

The principal risks and uncertainties for the remaining six months of the financial year are the same risks and uncertainties referred to and discussed in the 2011 Annual Report and Accounts. In particular, the Group is affected by the general economic conditions in the markets in which it operates, these conditions remaining uncertain and out-with the Group's 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 the continued pressures on public finances have continued to result in reductions in employment and other classified revenues in particular. Consumer confidence remains low throughout the United Kingdom and the Republic of Ireland and concerns continue around the economic performance, the future of the Eurozone and the level and timing 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.

Our unique local position continues to allow us to offer advertisers exceptional levels of local market penetration and our challenge is to improve our ability to monetise this. We believe that the strategic changes that we are implementing will allow us to do this effectively and in doing so will transform the position of the Group.

Ashley Highfield

Chief Executive Officer

21 August 2012

Forward-looking Statements

This interim report contains forward-looking statements. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurance that these expectations will prove to have been correct. Due to the inherent uncertainties, including both economic and business risk factors underlying such forward-looking information, actual results may differ materially from those expressed or implied by these forward-looking statements.

The Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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

Ashley Highfield Grant Murray

Chief Executive Officer Chief Financial Officer

21 August 2012 21 August 2012

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 ended 30 June 2012 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 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 30 June 2012 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

21 August 2012

Group Income Statement (unaudited) 26 Weeks to 30 June 2012

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

Group Statement of Comprehensive Income (unaudited)

26 Weeks to 30 June 2012

Group Statement of Comprehensive Income (unaudited)

26 Weeks to 2 July 2011

Group Reconciliation of Shareholders' Equity (unaudited)

26 Weeks to 30 June 2012

Group Reconciliation of Shareholders' Equity (unaudited)

26 Weeks to 2 July 2011

Group Statement of Financial Position (unaudited)

At 30 June 2012

Group Statement of Cash Flows (unaudited)

26 Weeks to 30 June 2012

Notes to the Interim Financial Information (unaudited)

1. General Information

The condensed financial information for the 26 weeks to 30 June 2012 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 31 December 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 31 December 2011, which was audited. The statutory accounts for this period have been filed with the Registrar of Companies. The auditor's 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 29 December 2012 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 21 August 2012 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 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 and these judgements are consistent with those set out in the Group's annual consolidated financial statements.

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 31 December 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.

c) Other segment information

Notes to the Interim Financial Information (unaudited)

continued

4. Non-Recurring Items

Non-recurring items included with the Group Income Statement are:

The Group has recognised revenue of £30.0 million during the period from News International for the partial termination of a long-term contract to provide printing facilities from 29 June 2012 (see page 2).

The write down of value in presses of £13,350,000 relates to the closure of the Peterborough printing press, which is now recorded at net realisable sale value.

5. Investment Income

6. Finance Costs

a) Net finance income on pension assets/liabilities

Notes to the Interim Financial Information (unaudited)

continued

7. Tax

The tax credit comprises:

The basic rate tax applied for the 2012 period of 24.5% was a blended rate due to the tax rate of 26% in effect for the first quarter of 2012, changing to 24% from 1 April 2012 under the 2012 Finance Act.

Corporation tax for the interim period is credited at 6.8% (2 July 2011: credited at 38.0%).

The Group estimates that the future rate changes to 23% would reduce its UK actual deferred tax liability provided at30 June 2012 by £7.1 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.

9. Dividends

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

Notes to the Interim Financial Information (unaudited)

continued

10. Intangible Assets

The Group tests the carrying value of publishing titles held within the publishing operating segment for impairment annually or more frequently if there are indications that they might be impaired. No indicators of impairment have been identified at 30 June 2012 hence no impairment test has been performed as at 30 June 2012. As a result, no impairment charge has been recognised in the period (2 July 2011: £nil, 31 December 2011: £163,695,000).

11. Derivative Financial Instruments

Derivatives that are carried at fair value are as follows:

Notes to the Interim Financial Information (unaudited)

continued

12. Borrowings

On April 24 2012, the Group announced the amendment and extension of its finance facilities until 30 September 2015. The facilities consist of a revolving credit facility, a term loan facility and private placement loan notes. The total available facility as at the date of refinancing was £393.0 million; following a scheduled repayment on 30 June 2012, the available facility is now £383.0 million.

The maximum cash margin in the case of the bank facilities is LIBOR plus 5.0% and in the case of the loan notes, a cash interest coupon of up to 10.3%. In addition to the cash margin, a payment-in-kind (PIK) margin of a maximum rate of 4.0% will accumulate and is payable at the end of the facility. If the loan facilities are fully repaid prior to 31 December 2014, the rate at which the PIK margin accrued throughout the period of the agreement will be recalculated at a substantially reduced rate.

New 5 year share warrants over the Company's share capital were agreed, with 2.5% issued in April 2012, and a further 5.0% to be issued in September 2012. In addition, the exercise period for the 5.0% warrants issued to the lenders in August 2009 has been extended to make the expiry of all warrants coterminous in September 2017.

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 31 December 2011 are outlined in the financial statements to that date. The major assumptions and disclosures for the 26 weeks to 30 June 2012, the 26 weeks to 2 July 2011 and the 52 weeks to 31 December 2011 are as follows:

During the period, the Company carried out three pension exchange exercises, whereby a number of pension members were made an offer by the Company 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 impact of these exercises is a non-recurring credit in the Group Income Statement of £1.5 million in the current period (2011: credit of £1.9 million).

14. Share-Based Payments

The Group issues share-based benefits to employees. These share-based payments have been measured at their fair value at the date of grant and the fair value of expected shares is being expensed to the Income Statement on a straight-line basis over the vesting period. Fair value has been measured using the Black Scholes model and adjusted to reflect the most likely share vesting and exercise pattern. The impact on the accounting periods has been:

During the period, a cost of £551,000 has been recognised within the share based payments reserve for the issue of 7.5% share warrants under the new refinancing arrangements agreed in April 2012 and the extension of 5.0% warrants issued in 2009.

The cumulative provision for share-based payments of £18,773,000 (2 July 2011: £17,634,000; 31 December 2011: £17,845,000) is shown as a reserve in the Group Statement of Financial Position.

Notes to the Interim Financial Information (unaudited)

continued

15. Notes to the Cash Flow Statement

16. Related Party Transactions

There have been no related party transactions that have occurred during the first six months of the financial year that have materially affected the financial position or performance of the Group during that period and there have been no changes in the related party transactions described in the 2011 Annual Report and Accounts that could do so.