RESULTS FOR THE 26 WEEK PERIOD ENDED 28 JUNE 2014

JOHNSTON PRESS PLC

RESULTS FOR THE 26 WEEK PERIOD ENDED 28 JUNE 2014

Continuing Strategic Progress Supports Robust Performance

Johnston Press plc, one of the leading multi-platform community media groups in the British Isles, announces its results for the 26 week period ended 28 June 2014.

Key Financials

The first half of 2014 has seen continued progress on the implementation of the strategy set out at the start of 2012: to grow our overall audience through re-launching our print titles and investing in new digital products across all platforms, to stem the decline in top line revenue and return to top line growth, to accelerate the growth of digital revenues, and thus to reverse the decline in operating profit enabling us to continue paying down debt. We are pleased to say that solid progress has been made on all of these key objectives.

Strategic progress:

Growing profitability

· Underlying operating profit was £28.3m for the first half of 2014, year on year growth of 3.6%.

· Underlying operating profit margins grew to 20.9%, up from 19.3% at H1 2013.

Building overall audiences

· Total audiences in June have grown to 25.6m monthly users across our print and digital platforms, representing 14.3% year on year growth.

· Digital audiences have grown to 15.9m unique users a month, representing the addition of 4.2m unique users year on year, an annual growth rate of 39.4%.

· Digital audiences in July reached approximately 18m unique users, a growth of almost 44%.

· In June 2014 mobile visitors to our news sites reached 6.7m users, growing 88% year on year representing 46% of all digital traffic.

· In 136 of the 151 markets in which we operate we are experiencing overall audience growth.

Digital revenue growth:

· Digital advertising grew 23.4% to £14.1m.

· Digital local display advertising continues to grow strongly, and at the half year point was up by 30% year on year.

· The key advertising categories of Employment (+15%), Property (+72%) and Motors (+132%) all continue to grow strongly in digital.

· Our digital marketing service offering (Digital Kitbag) is expanding. A total of 691 new orders were booked in the first half of the year with the monthly run rate increasing from 86 orders in April of this year to 214 orders in June. The average revenue per advertiser is also growing.

Returning to top line growth

· Total underlying revenue declines are narrowing; H1 2014 recorded a year on year underlying decline of 4.3% (compared to a decline of 5.3% during H1 2013).

· Total Advertising revenue for July 2014 was just 2.1% down year on year. This is on the back of a 4.6% year on year underlying decline in total advertising revenue in the first half of 2014, and an 8.1% year on year decline in the first half of 2013.

· The Sheffield 'Media Sales Centre' revenues are growing, up 5% year on year, across print and digital, with new outbound revenue streams delivering to plan.

· The Employment category is now in overall growth, up 4.1%.

· Underlying newspaper sales revenue decline rate is stable at 4.0%.

· Continuing focus on customer retention and winning new customers supported by better sales tools, templates and processes has seen total sales volumes in print advertising up fractionally year on year in 2014.

· Whilst National Advertising continues to show year on year declines overall, there are encouraging numbers in the growth sectors of Finance (+64%), Telco (+33%), Travel (+19%), and Grocery (+9%) sectors.

Maintaining cost leadership

· Underlying Operating costs were reduced by £7.1m year on year, a 6.2% saving year on year.

· Our reader-contributed-content project, which was made possible by our investment in better processes and technology, has added a social and community dimension to our news products which is familiar to audiences from new media platforms like Facebook. This enabled us to increase overall audience trends, improve our relevance, reduce our costs, and enable our skilled journalists to focus on specialist quality content that adds distinctive value to our products.

Summary and Outlook

Commenting on the results Ashley Highfield, Chief Executive, said:

· Johnston Press has delivered a solid first half performance. The results reflect our on-going progress against our strategic priorities as well as an improving economic climate, and demonstrate our continuing relevance to the communities we serve across print and digital. We are growing strongly in a number of categories, and reducing the decline in the rest, whilst continuing to bring down our cost base. As a result we are growing operating profits and margins.

· During the first half of 2014 we successfully delivered our capital refinancing plan where we raised £225m through a bond issue and £140m through a placing and rights issue, allowing us to pay down our historic debt. We now have a third less debt with a markedly lower interest rate resulting in our annual interest payments reducing from over £36m to around £20m. This puts Johnston Press on a much more stable footing and allows us now to focus on returning to top line growth and a prosperous future.

· Also in the first half of 2014 we sold our Republic of Ireland business, comprising 12 titles. The sale of our assets in the Republic of Ireland means we can focus our resources entirely on driving our business in the United Kingdom and Isle of Man, with particular emphasis on our digital initiatives. We are seeing continued growth in our total audience and in digital revenues and we believe this sale allows us to better capitalise on the opportunities in these markets. 

· The economy is continuing to improve and the ripple-out effect from London and the South East is beginning to show in the numbers in Scotland, Yorkshire and Northern Ireland. We have also seen a growth in a number of national advertising sectors such as Telecom, Finance, Travel and Grocery.

· There is a real momentum gathering pace within the Group, with innovation and creativity at the heart of new launches during H1, including our latest digital jobs offering Smartlist for Engineers, our ground breaking partnership with Sky, a re-launched WOW24/7 national what's-on entertainment website, the coming out of Beta of Digital KitBag, the Scotsman Scottish Referendum website, the relaunch in print and online of The Yorkshire Post, and brand new football apps for our major premier league and championship titles.

· With digital audiences regularly hitting 16m (up 39.4% year on year), July hitting 18m and digital revenues now representing 16.5% of total advertising revenues up from 12.7% during H1 of 2013 we are fast becoming a genuinely multi-media company

· In view of this operational progress, we are confident in continuing to deliver on our stated strategy.

For further information please contact:

Johnston Press

Ashley Highfield, Chief Executive Officer 020 7466 5000 (today) or

David King, Chief Financial Officer 0207 612 2611 (thereafter)

Buchanan 0207 7466 5000

Richard Oldworth / Sophie McNulty / Clare Akhurst

The Half Year Report for the period ended 28 June 2014 is available at www.johnstonpress.co.uk/investors

Forward looking statements

The report contains forward looking statements. Although the Group believes that the expectation reflected in these forward looking statements are reasonable, it can give no assurances that the expectations will prove to be 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.

Results for the six months ended 28 June 2014

A summary of the key financial results is set out in the table below:

Basis of presentation

In preparing commentary on performance, the financial impact of a number of significant accounting and operational items affecting the results have been adjusted for in arriving at the underlying results discussed in this review.

In the first half of 2014 the Group disposed of its Republic of Ireland business, which comprised of 12 titles. This business has been reported as discontinuing operations at 28 June 2014, and comparatives have been restated accordingly.

Revenue

Total statutory reported revenue in the first half of 2014 declined 11.5% to £135.8m. Underlying revenues declined 4.3% to £135.8m. In 2013 Contract Printing included £10m revenue from the termination of the remaining contract with News International which was an exceptional, non-recurring item.

Performance Review for Continuing Operations

Print and Digital Advertising Revenue

¹% and variance change has been calculated based on unrounded numbers.

Within total advertising revenue, print advertising performance has seen an improving trend, the half year ended 5.1% down, and July improved further just 2.1% down year on year.

Digital revenues grew by 23.4% (from £11.4m to £14.1m) in the period, with all categories of digital revenue performing strongly compared to the prior year. Within this, local online display, digital property and digital motor revenues grew by 31.0%, 71.9% and 131.6% respectively. Our Motors and Entertainments categories are both approaching the digital tipping points, where digital revenue growth is close to compensating for print revenue decline.

Newspaper sales

Underlying newspaper sales revenues were down 4% in the first half of the year; on a statutory basis the decline was 4.4%, in line with plan, reflecting a conservative cover price strategy. Circulation volumes are improving their year on year performance and trending towards our target of single digit decline across the portfolio by year end.

Contract printing

Underlying Contract print revenues in the first half of the year were £1.1m higher than 2013, mainly driven by new business contracts won.

Other revenues

Reported other revenues were down £1.5m period on period. Sundry sales revenue declined £1.0m year on year. Leaflet revenue declined 25.7% year on year, with volumes continuing to decline in 2014 affected primarily by the closure of a number of free titles in the second half of 2012. This revenue shortfall has largely been offset by a corresponding saving in leaflet distribution costs.

Gross margin and operating profit

The Group achieved a statutory operating profit, from continuing operations, of £24.9m in the first half (June 2013 loss £228.8m).

The Group continues to balance the need for investment in digital and journalism and cost savings. Within operating profit, underlying operating expenses continue to be actively managed and have reduced by £7.1m compared with the same period in 2013. The reduction in costs includes current year savings (through lower headcount, office rationalisation and an assortment of other initiatives) as well as the full year effect of the savings made last year. We are confident that we will achieve further cost savings in the year.

The tight management of costs has allowed us to improve the Group's underlying operating margin for the first half to 20.9% compared with 19.3% in the first half of 2013.

Exceptional Items

Exceptional operating items totalling £2.9m have been recognised in the first half of 2014 (29 June 2013 £256.8m). This comprises £2.3m of restructuring costs, £1.0m of pension plan expenses and £0.4m of aborted disposal costs partially offset by £0.9m gains on property and print asset disposals. A significant net exceptional loss of £256.9m was recognised in the first half of 2013, of which £255.9m related to impairment. Refer to Note 4 for further details. £10m of exceptional revenue was recognised in 2013 from the termination of the remaining contract with News International.

Of the £2.9m charge to exceptional items in the period ended 28 June 2014 (29 June 2013 £256.8m), £1.9m were cash items (29 June 2013 £0.9m).

Exceptional financing items totalling £9.0m have been recognised in the period. Further breakdown of these items is provided in Note 4.

Dividend

No interim dividend has been proposed or paid to any shareholder in the current period. There were no ordinary dividends proposed but not paid or included in the accounting records in either of the comparative periods shown.

Financial position

At the period end, the Group had net assets of £216.8m, an increase of £119.7m on the position at 28 December 2013. This increase is a direct consequence of the recent refinancing transactions which are discussed later in the Interim Management Report.

Other income statement items

Finance costs

Operational finance costs have increased by £1.4m compared to prior year, due to the interest accruing on the 8.625% Senior secured notes 2019 offered as part of the recent refinancing, for the period from 16 May 2014. Refer to Note 14 for further details.

Exceptional finance costs totalling £9.0m includes the £9.2m interest accrual release, and term debt issue costs written off in the period of £7.1m, following the refinancing. Other refinancing fees of £11.1m charged to exceptionals in the period relate to legal and professional fees associated with refinancing that were attributable to the equity and bond issue, the new revolving credit facility, the repayment of lending banks and noteholders and the new pension framework agreement.

Taxation (Refer to Note 7 in the condensed financial statements)

Corporation tax for the interim period is credited at 58.3% (29 June 2013: credited at 24.3%, 28 December 2013: credited at 25.8%), including deferred tax.

The tax on actuarial (losses)/gains on defined benefit pension schemes taken to the consolidated statement of comprehensive income is a credit of £2.4m comprising a deferred tax credit of £2.4m (29 June 2013: deferred tax charge £5.6m; 28 December 2013: deferred tax charge £9.3m).

Pensions (Refer to Note 15 in the condensed financial statements)

The Group's defined benefit pension plan deficit (as assessed under IAS19R) increased by £8.6m to £86.9m. The increase in the deficit was due to a reduction in the discount rate derived from long term corporate bonds yields.

Following the renegotiations of contributions to the deficit, the minimum amount of contributions committed to be paid to the scheme during 2014 is £6.3m; this contribution level has increased from prior year contributions of £5.7m.

Cash Flow/Net Debt

Following the recent refinancing, our interest charges on our gross debt are 8.625% (2013: 11.7% weighted average interest rate). The Group's net debt position has improved significantly compared to previous periods with net debt of £181.6m at 28 June 2014 (29 June 2013 £306.4m, 28 December 2013 £302.0m). The refinancing resulted in cash inflows of £360.5m, from the combined debt and equity raise, offset by repayment of historic debt and interest of £332.9m and financing fees paid of £15.6m in the period.

Cash held at 28 June 2014 was £39.5m, an increase of £12.9m compared to 29 June 2013, and £10.4m compared to 28 December 2013. Included in the cash balance at 28 June 2014 was £7m due to advisors and the Johnston Press defined benefit pension Trust, received as part of the refinancing, but not yet paid at the balance sheet date. The Group continues to maintain a tight control of working capital and capital expenditure with £3.7m having been spent on asset purchases (29 June 2013 £4.2m, full year 28 December 2013 £4.3m) offset by £6.3m received from non-essential asset sales (29 June 2013 £2.6m, full year 28 December 2013 £3.7m), and £6.5m received from the disposal of the Republic of Ireland publishing titles and assets.

Net cash outflow from continuing operations in the 26 weeks ended 28 June 2014 decreased 106.05% to £2.5m (2013 June : £41.3m inflow ; 2013 December : £54.1m inflow) which compares with EBITDA of £30.5m ( 2013 June: £32.8m; 2013 December : £62.6m). The operating cash flow was £29.6m lower than EBITDA principally as a result of redundancy payments made over the period and a modest working capital outflow.

Cash interest paid in the first half was £16.5m (29 June 2013 £18.2m, 28 December 2013 £24.8m), a decrease of 9.3% on the same period in 2013.

Financing

The Company announced on 23 June 2014 that it had successfully completed its Capital Refinancing Plan (announced on 9 May 2014). Gross proceeds of £140.0m were received by the Company in connection with the Placing and the Rights Issue, and further to the announcement made by the Company on 14 May 2014, gross proceeds of £220.5m were received from the offering of £225.0m 8.625% senior secured notes due 2019. The notes were issued at a discount of £4.5m.

All amounts previously outstanding were repaid and or cancelled in full, as at 23 June 2014 the Company paid in total £332.9m including the residual balance of Payment In Kind (PIK) interest and Make-Whole, and the interest accrued to 23 June 2014 amounting to £5m.

In addition, under the Capital Refinancing Plan the Company entered into a 4 year and 6 months (expiring 23 December 2018) £25m New Revolving Credit Facility which is currently undrawn.

Professional and legal fees associated with the refinancing have been incurred, totalling £21.1m. The fees related to £9.2m of equity related costs (Refer Note 16b - Share premium), £7.9m of bond issuance costs written off and £4.0m relating to legal and professional fees attributable to the equity and bond issue, the new revolving credit facility, the repayment of lending banks and noteholders and the new pension framework agreement (Refer to Note 4 - Exceptional items and 6c) Finance costs).

Events after balance sheet date

On 23rd July 2014, the Group received dividends from the Press Association totalling £2.1m.

Related party transactions

Related party transactions are disclosed in Note 19 to the condensed set of financial statements.

There have been no material changes in the related party transactions described in the last annual report.

Principal risks and uncertainties

There are a number of potential risks and uncertainties which have been identified by the business that could have a material impact on the Group's long-term performance.

The following significant market risks are important to the overall performance of the Group, and the Group has no control over these risk factors. The Directors consider the most significant market risks to include changes in gross domestic product and unemployment rates, levels of property transactions, new car sales and consumer confidence, public sector spending and the impact of the Scottish Independence referendum.

The Group has reviewed the list of principal risks and uncertainties reported in the 2013 Annual Report and updated this following the recent refinancing and sale of Euro based Irish titles. The Group has removed Interest rate risk and foreign exchange rate risk from its highlighted risks. This reflects the sales of the Euro based Irish titles, and the repayment of the Euro and USD denominated loan notes.

An explanation of the principal risks and uncertainties which could have a material impact on the Group's performance and how the Group seeks to mitigate the risks is described below.

Liquidity and Going Concern

Following the placing and rights issue, the Group now has gross debt of £225m. Cash on balance sheet of 28 June 2014 was £39.5m, and the Group has access to a £25m revolving credit facility (RCF) which is undrawn. The bond (Senior Secured notes) has a five year maturity due 2019, and the Group's RCF matures on 23 December 2018.

The Group's policy is to ensure it has committed funding in place sufficient to meet foreseeable peak borrowing requirements.

Based on its review, and after considering reasonably possible downside sensitivities, the Board is of the opinion that the Group has adequate financial resources to meet operational needs for the foreseeable future, and have concluded that it is appropriate to prepare the financial statements on a going concern basis.

Outlook

The Group has made further progress during the first half in implementing its strategy for growth, continuing to invest in technology to build its digital platform whilst maintaining a tight control on costs. Having reported its first underlying operating profit increase in seven years in 2013, the Group has now delivered further operating profit growth of 3.6% on an underlying basis in the half year to 28 June 2014.

On 23 June 2014 the Group completed its refinancing, raising £220.5m from its first bond issuance. This provides the Group with funding for 5 years, and offers a level of improved stability from which to develop the business. The Group's net debt fell from £302m at 28 December 2013, to £181.6m at 28 June 2014.

There are signs of economic growth in a number of the Group's geographic markets, and in some categories including motors and employment. The economic momentum has not yet reached all areas of the country in which the Group operates. Total Advertising revenue decline rates for the half year were 4.6%. July 2014 has seen a further improvement to a decline rate of just 2.1% compared to July 2013.

We remain focused on adapting our business to the changing environment in which we operate and reaching the point where digital growth will offset any further decline in print so that we can return to overall top line growth.

In view of this operational progress, we are confident in continuing to deliver on our stated strategy.

Responsibility Statement

We confirm that 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 interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c) the interim management report 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,

Chief Executive Officer Chief Financial Officer

Ashley Highfield David King

6 August 2014 6 August 2014

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 28 June 2014 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 20. 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 Conduct 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 months ended 28 June 2014 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 Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

6 August 2014

Johnston Press plc

Consolidated income statement for the 26 week period ended 28 June 2014

1The adoption of IAS19R has affected the measurement and presentation of pension related gains and losses. Refer to the Accounting policies section for further details.

2Comparative income statement information has been restated to show the Republic of Ireland business as a discontinued operation due to its disposal on 1 April 2014.

3Items which are deemed to be non-recurring by virtue of their nature or size. Refer to note 4 for further details.

1 Comparatives restated to show additional bonus issues and rights issue of 5,293,860,091 (refer note 16a) following the Group's announcement of the Capital Refinancing Plan.

Johnston Press plc

Consolidated statement of comprehensive income for the 26 week period ended 28 June 2014

Consolidated statement of comprehensive income for the 26 week period ended 29 June 2013

1The adoption of IAS19R has affected the measurement and presentation of pension related gains and losses. Refer to the Accounting policies section for further details.

2Actuarial loss of £12,147,000 (June 2013: gain of £24,372,000) net of deferred tax credit of £2,429,000 (June 2013: deferred tax charge of £5,606,000)

Johnston Press plc

Consolidated statement of changes in equity for the 26 week period ended 28 June 2014

Consolidated statement of changes in equity for the 26 week period ended 29 June 2013

Johnston Press plc

Consolidated balance sheet as at 28 June 2014

Johnston Press plc

Consolidated cash flow statement for the 26 week period ended 28 June 2014

Johnston Press plc

Notes to the condensed set of financial statements

1. General Information

The condensed financial information for the 26 weeks to 28 June 2014 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 interim financial report constitutes a dissemination announcement in accordance with Rule 6.3 of the Disclosure and Transparency Rules of the United Kingdom Listing Authority.

The condensed financial information in respect of the 52 weeks ended 28 December 2013 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 28 December 2013, 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. Whilst the report was unqualified, there was however an emphasis of matter in relation to going concern.

The next annual financial statements of the Group for the 53 weeks to 3 January 2015 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 and Disclosure and Transparency Rules. The auditor has reviewed the financial information in this Interim Report and their report is set out on page 13. 

The Interim Report was approved by the Directors on 5 August 2014 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, pension balances and financial instruments. Historical cost is generally based on the fair value of the consideration given in exchange for the assets.

The directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis of accounting in preparing the unaudited condensed consolidated interim financial statements.

On 23 June 2014 the Company announced that it had successfully completed its Capital Refinancing Plan (announced on 9 May 2014). Gross proceeds of £140.0 million were received by the Company in connection with the Placing and Rights Issue, and further to the announcement made by the Company on 14 May 2014, gross proceeds of £220.5 million were received from the offering of £225.0 million 8.625% senior secured notes due 2019 at a discount of £4.5 million. Previous borrowings outstanding were repaid and cancelled as at 23 June 2014 resulting in the payment of £332.9 million (refer to note 14). In addition, the Company entered into a 4 year and 6 month £25 million Super Senior Revolving Facility Agreement ("RCF") which is currently undrawn. Under the RCF, the Group has one financial covenant, measured quarterly, requiring the achievement of a specified ratio of consolidated leverage to consolidated EBITDA for the last 12 months.

As part of the refinancing process, the Board has undertaken a recent and thorough review of its forecasts and associated risks. These forecasts extend for a period of 12 months from the date of approval of these unaudited condensed consolidated interim financial statements and demonstrate the availability of adequate financial resource and demonstrate compliance with financial covenants over the period. Based on its review and after considering reasonably possible downside sensitivities, the Directors are satisfied that it is reasonable to adopt the going concern basis of accounting.

Basis of Accounting

Adoption of new or amended standards and interpretations in the current period

In the current financial period, the Group has adopted the following new standards, amendments to standards and interpretations which are effective for periods commencing from 1 January 2013 onwards. With the exception of the impact of IAS 19 (revised 2011) which is explained below, their adoption has not had any significant impact on the amounts reported in these interim financial statements but may impact the accounting for future transactions and arrangements. Further details of the impact of adoption will be included in the 53 weeks to 3 January 2015 financial statements.

IAS 19 (revised 2011) - Employee benefits ('IAS 19R') is effective for annual periods beginning on or after 1 January 2013. The key changes are that the deferral of actuarial gains and losses is no longer permitted and the deficit should be recognised in full on the balance sheet (subject to any restrictions in IFRIC 14) and the finance cost, which was the difference between the interest on liabilities and expected return on assets has been replaced by a net interest cost. In most cases the finance cost will increase as the expected return on assets will effectively be based on the discount rate (i.e. the returns available on AA-rated corporate bonds) with no allowance made for any outperformance expected from the Plan's actual asset holding. More disclosure will be required about the risks posed by the Plan.

The amendments to IAS 19R have impacted the presentation of pensions related gains and losses in the income statement and statement of comprehensive income. For the restated periods ended 29 June 2013 and 28 December 2013, the lower expected return on assets reduced the level of pension income that was recognised in the income statement leading to a higher net expense of £5.0 million and £10.2 million before tax respectively. The amounts recognised in other comprehensive income reduced by £5.0 million and £10.2 million respectively. There was no change in the statement of financial position or cash flow statement as a result of implementing IAS 19R.

IFRS 13 - Fair Value Measurement: applies whenever another IFRS requires or permits fair value measurements, or disclosures about fair value measurements, with some limited exceptions. The IFRS applies to measurements such as fair value less costs to sell that are clearly based upon fair value, as well as to disclosures about such items. IFRS 13 provides a consistent framework with a single definition of fair value as 'the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date'. IFRS 13 disclosures as required are reflected in the notes to these financial statements.

Amendments to IFRS 10, IFRS 12 and IAS 27 - Investment Entities (endorsed 20 November 2013)

IAS 36 (amendments) - Recoverable Amount Disclosures for Non-Financial Assets (endorsed 19 December 2013)

IAS 39 - Novation of Derivatives and Continuation of Hedge Accounting (endorsed 19 December 2013)

Critical judgements in applying the Group's accounting policies

In the process of applying the Group's accounting policies, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements (apart from those involving estimations, which are dealt with below).

The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Exceptional items

Exceptional items include significant transactions such as the costs associated with restructuring of businesses along with material items including for example revenue received on the termination of significant print contracts, significant pension related costs, the disposal or exit of a significant property directly linked to restructuring and impairment of intangible and tangible assets together with the associated tax impact. The Company considers such items are material to the Income Statement and their separate disclosure is necessary for an appropriate understanding of the Group's financial performance. These items have been presented as a separate column in the Group Income Statement.

Valuation of publishing titles on acquisition

The Group's policies require that a fair value at the date of acquisition be attributed to the publishing titles owned by each acquired entity. The Group's management uses its judgement to determine the fair value attributable to each acquired publishing title taking into account the consideration paid, the earnings history and potential of the title, any recent similar transactions, industry statistics such as average earnings multiples and any other relevant factors.

The publishing titles are considered to have indefinite economic lives due to the historic longevity of the brands and the ability to evolve the brands in the changing media environment.

Assets held for sale

Where a property or a significant item of equipment (such as a print press or property no longer required as part of Group operations) is marketed for sale, management is highly committed to the sale and the asset is available for immediate sale, the Group classifies that asset as held for sale. If the asset is expected to be sold within twelve months, the asset is classed as a current asset. The value of the asset is held at the lower of the net book value or the expected realisable sale value.

The Directors have estimated the sale values based on the current price that the asset is being marketed at and advice from independent property agents. The actual sale proceeds may differ from the estimate.

Provisions for onerous leases and dilapidations

Where the Group exits a rented property, an estimate of the anticipated total future cost payable under the terms of the operating lease, including rentals, rates and other related expenses, is charged to the Income Statement at the point where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. Where there is a break clause in the contract, rentals are provided for up to that point. In addition, an estimate is made of the likelihood of sub-letting the premises and any rentals that would be receivable from a sub tenant. Where receipt of sub-lease rentals is considered reasonable, these amounts are deducted from the rentals payable by the Group under the lease and provision charged for the net amount.

Under the terms of a number of property leases, the Group is required to return the property to its original condition at the lease expiry date. The Group has estimated the expected costs of these dilapidations and charged these costs to the Income Statement. No discounting has been applied to the provision as the effect of the discounting is not considered material.

Valuation of share-based payments

The Group estimates the expected value of equity-settled share-based payments and this is charged through the Income Statement over the vesting periods of the relevant awards. The cost is estimated using a Black-Scholes valuation model. The Black-Scholes calculations are based on a number of assumptions that are set out in Note 30 of the 28 December 2013 financial statements, and are amended to take account of estimated levels of share vesting and exercise.

Key sources of estimation uncertainty

The key assumptions concerning the future and other key sources of estimation uncertainty at the period end date that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial period, are discussed below.

Impairment of publishing titles and print presses

Determining whether publishing titles are impaired requires an estimation of the value in use of the cash generating units (CGUs) to which these assets are allocated. Key areas of judgement in the value in use calculation include the identification of appropriate CGUs, estimation of future cash flows expected to arise from each CGU, the long-term growth rates and a suitable discount rate to apply to cash flows in order to calculate present value. The Group has identified its CGUs based on the seven geographic regions in which it operates. This is considered to be the lowest level at which cash inflows generated are largely independent of the cash inflows from other groups of assets and has been consistently applied in the current and prior periods. At the interim period an assessment has been made of whether any potential triggering event has arisen which would require an interim review of the carrying value - no such event has arisen and no impairment loss has been recognised in 2014 (June 2013: £194.5m, December 2013: £202.4m). The carrying value of publishing titles at 28 June 2014 was £533.1 million (June 2013: £548.8m; December 2013: £538.5m). Details of the impairment reviews that the Group performs are provided in Note 11.

Determining whether print presses are impaired requires an estimation of the value in use of each print site. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the print sites and a suitable discount rate in order to calculate present value.

Valuation of pension liabilities

The Group records in its Statement of Financial Position a liability equivalent to the deficit on the Group's defined benefit pension schemes. This liability is determined with advice from the Group's actuarial advisers each year and can fluctuate based on a number of factors, some of which are outside the control of management. The main factors that can impact the valuation include:

the discount rate used to discount future liabilities back to the present date, determined from the yield on corporate bonds;

the actual returns on investments experienced as compared to the expected rates used in the previous valuation;

the actual rates of salary and pension increase as compared to the expected rates used in the previous valuation;

the forecast inflation rate experienced as compared to the expected rates used in the previous valuation; and

mortality assumptions.

Details of the assumptions used to determine the liability at 28 June 2014 are set out in Note 15.

 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 Publishing (in print and online) and Contract Printing. These are the only two operating segments of the Group.

a) Segment Revenues and Results

1Inter segment sales are charged at prevailing market prices.

2Relates to changes in fair value of hedges, retranslation of USD and retranslation of Euro denominated debt.