Trinity Mirror : Half Yearly Report

3 August 2015

Half-Yearly Financial Report

For the 26 weeks ended 28 June 2015

Key Highlights

Whilst market conditions for print advertising have remained challenging in the first half, we have seen continued growth in digital revenue. With tight management of the cost base, including targeted structural cost savings of £20 million, the Board remains confident that profits for the full year will be in line with expectations.

· Continued strong growth in digital audience and revenue

Digital continued to perform strongly during the first half, with average monthly unique users and average monthly page views (1) growing by 55% and 59% respectively. Publishing digital revenue grew by 27% with Publishing digital display advertising revenue growing by 44%.

· Adjusted (2) profit before tax down 2.5% to £47.0 million with adjusted earnings per share down 1.3% to 15.3pence

Despite a decline of 8.7% or £27.6 million in underlying (3) revenue, tight management of the cost base limited the decline in adjusted profit before tax to only 2.5% or £1.2 million with adjusted earnings per share down marginally by 1.3% to 15.3 pence.

The fall in statutory profit before tax primarily reflects the non-recurring gain of £27.5 million in associates in the first half of 2014 and the previously announced increase of £16.0 million (2014: increase of £4 million) in the provision for historical issues in relation to phone hacking. Excluding the year on year impact of these two items, statutory profit before tax increased by £1.1 million.

· Robust balance sheet and financial flexibility with net cash (4) position of £23.9 million

A continued focus on delivering strong cash generation together with the benefit of £16.3 million of dividends from associates left the Group with a net cash position of £23.9 million as at 28 June 2015, compared to net debt of £19.3 million at the end of 2014. The strong balance sheet position provides the Group with the financial flexibility to pay dividends and pursue investment opportunities alongside appropriately funding pension scheme liabilities.

· Board approves an interim dividend of 2 pence per ordinary share

The Board has approved an interim dividend for 2015 of 2 pence per ordinary share, payable on 30 November 2015.

· Strategy remains on track

Although the trading environment remains challenging, the Board remains confident that the strategy will deliver growth over the medium term.

(1) Average monthly unique users and page views for the Publishing division across web, mobile and apps for January to June 2015 versus January to June 2014.

(2) Adjusted items relate to the exclusion of non-recurring items, restructuring charges in respect of cost reduction measures, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments, the pension finance charge and the pension administrative expenses. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

(3) Underlying trends exclude revenues for title closures in the South and the newsprint supply to the Independent and i which ceased at the end of 2014. In the full year 2014, the revenue generated by the titles closed in the South was £4.5 million and from newsprint supply to the Independent and i was £11.1 million and for the half year 2014 was £2.3 million and £5.8 million respectively.

(4) On a contracted basis assuming that the private placement loan notes and related cross-currency interest rate swaps are not terminated prior to maturity.

Commenting on the interim results for 2015, Simon Fox, Chief Executive, Trinity Mirror plc, said:

"The print advertising environment has been more challenging than anticipated in the first half. As a result, whilst continuing to invest in people and technology to drive the ongoing growth in digital audience and revenue, we have taken further action to address our print cost base. The strong cash generative nature of the business has enabled us to continue to strengthen our balance sheet, to the extent that the Group had a net cash position for the first time in its history at the end of the half year. At the same time we continue to make the agreed pension contributions whilst paying an interim dividend of 2 pence per share.

I remain confident that our strategy will deliver sustainable growth in revenue and profit over the medium term despite the difficult print advertising market conditions. The actions we are taking in support of both our print and digital products provide the Board with confidence that profits for 2015 will be in line with expectations."

Enquiries

Trinity Mirror

Simon Fox, Chief Executive 020 7293 3553

Vijay Vaghela, Group Finance Director 020 7293 3553

Brunswick

Mike Smith, Partner 020 7404 5959

Jon Drage, Director 020 7404 5959

Investor presentation

A presentation for analysts will be held at 9.30am on Monday3 August 2015. The presentation will be live on our website: www.trinitymirror.com at 9.30am and a playback will be available from 2.00pm.

Statutory and adjusted basis

In the Management Report, performance is stated on an adjusted basis to provide a more meaningful comparison of the Group's performance. The adjusted results aim to demonstrate the performance of the Group without the volatility created by restructuring charges, non-recurring items and non-cash accounting items. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

Forward looking statements

Statements contained in this Half-Yearly Financial Report are based on the knowledge and information available to the Company's directors at the date it was prepared and therefore the facts stated and views expressed may change after that date. By their nature, the statements concerning the risks and uncertainties facing the Company in this Half-Yearly Financial Report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Half-Yearly Financial Report contains any statement dealing with any time after the date of its preparation such statement is merely predictive and speculative as it relates to events and circumstances which are yet to occur. The Company undertakes no obligation to update these forward looking statements.

Management Report

Operational Performance

The Group performance for the first half reflects a more challenging print revenue environment. Despite this, continued progress was made on our strategic initiatives.

Group revenue fell by 11.0% with Publishing revenue falling by 9.6% comprising Publishing print down 11.6% and Publishing digital up 26.8%. On an underlying basis, Group revenue fell by 8.7% with Publishing revenue declining by 8.8%, Publishing print declining by 10.9% and Publishing digital growing 26.8%. The Group has experienced continued pressure in print national advertising markets with a slowdown in retail spend, in particular supermarkets, but also reduced spend in telecoms, motors and entertainment categories.

The benefit of structural cost savings of £7 million, the cessation of newsprint supply to the Independent and i of £5.8 million together with cost mitigation actions and lower newsprint prices have contributed to operating costs falling by £32.9 million after increased investment in digital of £3 million. Excluding the change in newsprint supply arrangements to the Independent and i operating costs fell by £27.1 million.

Our share of results of associates increased by £0.4 million to £3.5 million with Local World increasing by £0.3 million to £3.1 million and PA Group increasing by £0.1 million to £0.4 million. Dividends of £16.3 million from associates were received during the first half with £12.0 million from Local World and £4.3 million from PA Group.

The fall in operating costs reduced the impact of lower revenues on operating profit to only £2.4 million or 4.8% and the fall in profit before tax to a marginal £1.2 million or 2.5%. Earnings per share benefited from lower interest costs due to reduced borrowings and from the fall in the rate of corporation tax and fell marginally by 1.3% to 15.3 pence.

Non-recurring items during the first half totalled a charge of £17.4 million. This comprised an increase of £16.0 million in the provision in relation to phone hacking and a £1.4 million charge related to the closure of our print plant in Blantyre, Scotland, including £1.0 million of non-cash fixed asset write offs. Restructuring charges in respect of cost reduction measures of £7.3 million were incurred during the first half.

Statutory operating profit fell by £40.4 million to £19.6 million reflecting the gain of £27.5 million in the first half of 2014 arising on the disposal of MeteoGroup by our associate, PA Group and a net increase of £12.0 million (£16 million charge in first half of 2015 compared to a £4.0 million charge in the first half of 2014) in the charge to the income statement for dealing with historical legal issues in relation to phone hacking. Excluding the year on year impact of these two items profit before tax increased by £1.1 million.

Financial Flexibility

Continued strong cash flows enabled the Group to move to a net cash position, the first time in its history. Cash balances of £92.2 million exceed the outstanding private placement loan notes totalling £68.3 million which are not due for repayment until June 2017. The Group also has no drawings on its £60 million bank facility which is committed until July 2018.

The deficit on the defined benefit pension schemes fell by £10.4 million from £301.2 million to £290.8 million. Net of tax the deficit is £232.6 million. Following the prepayment of £17.0 million in December 2014, the Group has made contributions of £9.9 million in the first half with payments of £10 million expected in the second half. Thereafter, payments to the pension schemes will be £36 million per annum.

The strong and improving balance sheet position provides the Group with financial flexibility to pay dividends and pursue investment opportunities alongside appropriately funding the deficits in the pension schemes.

Dividends

The final dividend for 2014 of 3 pence per share was paid in June 2015, being the first dividend paid by the Group since 2008. The Board has approved an interim dividend for 2015 of 2 pence per share. This will be paid on 30 November 2015 to shareholders on the register on 2 October 2015. This is in line with the dividend policy aligned to the free cash generation of the Group and the investment required to deliver sustainable growth in revenue and profit over the medium term.

Historical Legal Issues

Further to our announcement on 4 June 2015, we confirm that our subsidiary, MGN Limited, is seeking permission to appeal to the Court of Appeal the judgment handed down by Mr Justice Mann on 21 May 2015 in relation to civil claims relating to phone hacking. As we have previously indicated, there remains uncertainty as to how matters will progress. Further updates will be made if there are any significant developments.

Management Report

Outlook

The revenue environment has remained challenging throughout the first half. July revenue trends are better than those experienced during May and June, with total revenue falling by 11% representing an underlying decline of 9%. Although monthly revenue trends are expected to remain volatile for the rest of the year the Board continues to expect profits for the full year to be in line with expectations.

Despite the difficult trading environment, the Board remains confident that the strategy will deliver growth over the medium term. However, in light of this more challenging print advertising environment, the Group reviewed its cost reduction programme and, as previously announced, is now targeting structural cost savings of £20 million for the year, an increase on the £10 million target announced in March 2015. This, coupled with ongoing cost mitigation actions and continued investment to drive digital revenue, will help underpin profits. The increased targeted cost savings will result in restructuring costs increasing by some £5 million to £15 million. We have also reviewed our capital expenditure programme and now anticipate capital expenditure of £10 million, a reduction of £5 million from the previous guidance of £15 million for the year.

Strategic Update

We continue to make progress towards delivering our vision "of being a dynamic and growing media business that is an essential part of our customers' daily lives". Our clear goal to deliver sustainable growth in revenue and profit will be delivered through four key areas of strategic focus:

· Protecting and revitalising our core brands in print;

· Growing our existing brands onto digital delivery channels;

· Continuing our relentless focus on efficiency and cost management; and

· Launching, developing, investing in or acquiring new businesses built around distinctive content or audience.

Key highlights of progress on each area of strategic focus in the first half of the year were:

Protecting and revitalising our core brands in print

We continue to enhance and adapt our portfolio to support circulation volumes and optimise revenues and profits.

· The Daily Mirror outperformed the UK national daily tabloid market for the first half although volume trends have softened compared to 2014. The market for our other titles remains challenging with some individual titles performing well relative to the market.

· The Daily Mirror print advertising volume market share in the UK national daily tabloid market declined from 18.6% to 18.1%, although the share was up against the UK national daily popular tabloid market. The Sunday Mirror, Sunday People and Daily Record all grew advertising volume share while share declined for the Sunday Mail. Our regional titles continue to experience difficult advertising markets, particularly national advertising in our metropolitan titles.

· The launch of Britain's biggest free weekly newspaper, the Manchester Weekly News, with a distribution of 265,000 across Greater Manchester. Launched in April, the title replaced six titles previously distributed across Manchester. It has a large proportion of the editorial content and display advertising editionised to three areas: Salford, South Manchester and Tameside.

· The launch of The Visiter, a new free newspaper covering the entire Sefton region, replacing the Formby Times and the Crosby Herald. The title is supported by a new region wide website,www.visiter.co.uk, covering news, sport, local information and What's On.

· On 29 June 2015, the Liverpool Echo was re-launched with a new design and approach to content based on consumer research and a month long consultation with readers who provided feedback to the Editor, Ali Machray via the Twitter hashtag #TellAli, the Echo's website and hundreds of letters. The new design is a significant change in format and layout compared to traditional newspapers and reflects the changing media consumption habits of our readers with less focus on crime, more reporting on things to do in the city and improved coverage of both football clubs in the region.

· The Trinity Mirror Solutions team are delivering thought leadership to our advertising clients in a series of road shows. The visits include live midday Editorial conferences hosted by Trinity Mirror Editor-in-Chief Lloyd Embley. A core part of the road show is to introduce Modal Britain to our advertising clients, Trinity Mirror's mass-market audience which our brands represent.

Management Report continued

Strategic Update continued

Growing our existing brands onto digital delivery channels

· During the first half, average monthly unique users and average monthly pages views grew by 55% and 59% respectively and digital display revenue grew by 44%.

· We have increased our operational investment across our digital activities during the first half by £3 million with a particular focus on content and product.

· Mobile continues to be an increasingly important component of digital revenue growth and we are enhancing our products and advertising formats to take advantage of the ongoing opportunity in this area.

· Building on this momentum, the Mirror has launched a new appwith a completely new interface and user experience, giving users faster and more personalised access to the Mirror's news stories. This has been built in-house and marks a step-change in how the Mirror delivers news to its mobile audience. We are now rolling out the app for our other core sites.

· Trinity Mirror Solutions have continued to build capabilities within their Inventions team to fully benefit from the rising interest in content marketing from our advertisers. In the period, they have delivered digital and print creative solutions for clients including Kellogg's, the NHS and Star Wars Day.

Continuing our relentless focus on efficiency and cost management

· A number of initiatives during the first half delivered structural cost savings of £7 million. Key actions in the first half included editorial and advertising changes to produce greater efficiency across a number of titles including our national titles, the closure of our small print plant in Blantyre, Scotland, consolidation of pre press operations into Liverpool for the regional titles and rationalisation of the property portfolio enabling the sublet of space in Glasgow and Cardiff.

· As previously announced, we have increased our structural cost savings target for 2015 by £10 million to £20 million. The increased targeted cost savings will result in restructuring costs increasing by some £5 million to £15 million.

· We have also reviewed our capital expenditure programme and now anticipate capital expenditure of £10 million, a reduction of £5 million from the previously guided £15 million for the year.

Launching, developing, investing in or acquiring new businesses built around distinctive content or audience

· The Group's Sport Media team are the Official Match Day Programme and Pre-Tournament Magazine Licensee for Rugby World Cup 2015 in England. Sport Media will produce and distribute, in print and electronic format, all 48 Match Day Programmes, plus the Official Pre-Tournament Magazine, and will use its reach of leading regional news brands to assist with promoting and marketing the tournament, which kicks off on 18 September 2015.

· We continue to make progress on growing revenue from Pinpoint, our app-based mobile advertising network. Pinpoint enables advertisers to reach a geo-targeted audience of approximately 2 million Trinity Mirror app users through their mobile devices. After launching in the final quarter of 2014 we have served over 160 advertisers including many household names such as Paddy Power, Manchester City Council and Marks and Spencer.

· The Group launched two digital only brands during the first half, 'getreading' and 'Belfast Live'. Both sites are making good progress on building audience.

The Board is confident that its strategy to grow revenue and profit over the medium term remains on track despite the difficult print advertising market conditions. The strong cash position provides significant flexibility for the Group to continue investment in support of its strategy for growth whilst meeting its pension obligations and paying dividends to shareholders.

Management Report

Group Review

The results have been prepared for the 26 weeks ended 28 June 2015 (2015) and the comparative period has been prepared for the 26 weeks ended 29 June 2014 (2014). The results are presented on a statutory and adjusted basis to provide a more meaningful comparison of the Group's performance. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

Revenue fell by £35.7 million or 11.0% to £288.5 million. Further details on the revenue trends for each division are shown in the Divisional Review.

Statutory costs fell by £22.6 million or 7.7% to £270.9 million reflecting the reduced adjusted operating costs which helped offset the more challenging print advertising market. There was also an increase of £16.0 million in the provision (2014: £4.0 million) for dealing with historical legal issues in relation to phone hacking.

Adjusted operating costs fell by £32.9 million or 11.9% to £244.1 million reflecting the benefit of structural cost savings of £7 million, the cessation of newsprint supply to the Independent and i of £5.8 million together with ongoing cost mitigation actions and the benefit from reduced newsprint prices which have more than offset increased investment in digital of £3 million and inflationary increases in non newsprint costs.

Management Report

Group Review continued

The Group has a 21.5% investment in PA Group and a 20.0% investment in Local World, accounted for as associated undertakings.

The statutory share of the post tax profits from associates fell by £27.3 million to £2.0 million. The 2014 non-recurring items comprised our £27.5 million share of the gain on the disposal by PA Group of its weather forecasting business, MeteoGroup, our £0.4 million share of the profit of MeteoGroup recorded by PA Group up to the date of completion less our £0.3 million share of restructuring costs incurred by PA Group and Local World. Adjusted share of the post tax profit from associates increased by £0.4 million to £3.5 million.

The fall in statutory operating profit of £40.4 million to £19.6 million is driven by our share of the exceptional gain in the first half of 2014 by PA Group on their disposal of MeteoGroup and a net increase of £12.0 million in the charge to the income statement for dealing with historical legal issues in relation to phone hacking. Adjusted operating profit fell by only £2.4 million or 4.8% to £47.9 million with operating margin pre associates increasing by 0.8 percentage points from 14.6% to 15.4%.

Statutory financing costs which include the pension finance charge, the change in derivative financial instruments and the foreign exchange changes on retranslation of foreign currency borrowings fell by £2.0 million to £7.5 million. Adjusted financing costs fell by £1.2 million to £0.9 million reflecting the benefit of the material fall in long term debt and the continued benefit of the low interest rate environment.

The statutory tax charge of £2.2 million (2014: £4.9 million) comprises a current tax charge of £2.6 million (2014: £7.8 million) and a deferred tax credit of £0.4 million (2014: £2.9 million). The effective tax rate is lower than the standard rate of corporation tax as the share of results of associates is post tax. The adjusted tax charge of £9.0 million (2014: £9.8 million) represents 19.3% (2014: 20.3%) of adjusted profit before tax and reflects the benefit of the reduction in the rate of corporation tax from 21.0% to 20.0% on 1 April 2015.

Statutory earnings per share fell by 14.4 pence or 78.3% to 4.0 pence and adjusted earnings per share fell marginally by 0.2 pence or 1.3% to 15.3 pence. The increase in the weighted average number of shares year on year reflects the impact of the 2,119,839 share options exercised during the period and the 3,408,484 share options exercised during the prior year partially offset by the 1,391,620 of shares acquired by the Trustees of the Trinity Mirror Employee Benefit Trust in the prior year.

Management Report

Divisional Review

The Group has four operating segments, each of which is a division, that are regularly reviewed for the purposes of allocating resources and assessing performance. The divisional review that follows is presented on an adjusted basis and there is no difference between the operating profit by division and the segment result of each operating segment that is shown in note 3.

The operating segments are: Publishing which includes all of our newspapers and associated digital publishing; Printing which provides printing services to the publishing segment and to third parties; Specialist Digital which includes our acquired digital recruitment classified business and our digital marketing services businesses; and Central which includes revenue and costs not allocated to the operational divisions and our share of results of associates.

The revenue and adjusted operating profit by operating segment is presented below:

Revenue on an underlying basis is:

The impact on operating profit is immaterial.

Publishing

The revenue and operating profit for the Publishing division is as follows:

Revenue fell by 9.6% or £27.0 million to £254.6 million with print revenue declining by 11.6% and digital revenue growing by 26.8%. On an underlying basis revenue fell by 8.8% with print revenue declining by 10.9% and digital revenue growing by 26.8%.

Management Report

Divisional Review continued

Publishing continued

Costs fell by £22.8 million or 10.0% to £205.1 million. This includes structural cost savings, title closures, the continued tight management of the cost base to help mitigate the impact of a challenging print market and the benefit from a fall in newsprint prices. The fall in costs is after increased investment of £3.0 million in digital resources and product development.

Although revenue fell by £27.0 million, operating profit fell by only £4.2 million or 7.8% to £49.5 million with operating margin increasing by 0.3 percentage points from 19.1% to 19.4%.

Print revenue

Circulation revenue fell by 5.8% compared to a decline of 1.2% in the first half of 2014 reflecting the delayed cover price increase of the Daily Mirror Monday to Friday edition which took effect in May whereas this was implemented in January in 2014. In June, the circulation revenues fell by a reduced 5.0%.

The Daily Mirror outperformed the UK national daily tabloid market for the first half with a volume decline of 8.3% compared to an 8.4% decline for the market. The Sunday Mirror and Sunday People declined by 9.8% and 12.8% respectively in a UK national Sunday tabloid market that declined by 10.1%. The Daily Record was down 12.2% against an overall Scottish daily tabloid market decline of 10.3% and the Sunday Mail was down 13.4% against an overall Scottish Sunday tabloid market decline of 11.5%. The market for our regional titles remains difficult with declines of 12.5% for paid for dailies, 14.1% for paid for weeklies and 16.8% for paid for Sundays. Whist we have individual titles performing well relative to the market, our overall trends remain challenging.

Print advertising fell by 19.0% with display lower by 21.1%, classified lower by 14.8% and other categories down by 22.2%. Underlying print advertising fell by 17.5% with display lower by 20.1%, classified lower by 12.2% and other categories down by 22.2%.

The Daily Mirror print advertising volume market share in the UK national daily tabloid market declined from 18.6% to 18.1%, although the share was up against the UK national daily popular tabloid market. The Sunday Mirror and Sunday People have grown share with the Sunday Mirror growing share from 17.5% to 17.7% and the Sunday People growing share from 11.0% to 12.6%. The Daily Record share improved from 15.0% to 15.7% and the Sunday Mail share declined from 28.1% to 27.3%. Our regional titles continue to experience difficult advertising markets, particularly national advertising in our metropolitan titles.

Other print revenue fell by 13.8% driven by continued pressure on leaflets, lower waste sales due to lower prices and lower reader offers revenue. Underlying other print revenue fell by 12.9%.

Digital revenue

Digital revenue grew by 26.8% year on year driven by strong growth in our publishing digital audience with average monthly unique users increasing 55% to 95.3 million year on year and with average monthly page views increasing 59% to 698.4 million year on year. In June, monthly unique users were 96.1 million and monthly page views were 759.8 million.

Digital advertising revenue increased by 25.8% year on year. Digital display revenue grew by 44.0% with classified falling marginally by 2.2%. Digital other revenue increased by 35.3% benefiting from the growth in audience and new commercial partnerships.

Printing

The revenue and costs of the Printing division is as follows:

Management Report

Divisional Review continued

Printing continued

Revenue fell by £9.6 million or 28.4% to £24.2 million. More than half of the decline has been driven by the ending of a newsprint supply agreement to the Independent and i at the end of 2014. The change in the newsprint supply agreement has no impact on profit, but reduces revenue and cost for newsprint supply. In the first half of 2014, newsprint supply revenue from the Independent and i amounted to £5.8 million with annual revenue in 2014 of £11.1 million. On an underlying basis revenue fell by 13.6%.

Revenues from contract printing fell by £2.0 million or 10.3% to £17.5 million. Revenue from newsprint supplied to contract print customers fell due to lower volumes and lower newsprint prices.

External costs fell by £19.6 million or 19.8% to £79.2 million due to cost reduction initiatives, a fall in newsprint prices, the cessation of the newsprint supply contract to the Independent and i and reduction in costs associated with falling contract print revenue. The net cost recharged to the Publishing division was £55.0 million compared to £65.0 million in the prior year. This fall in the recharge reflects the impact of cost savings, the fall in newsprint prices and reduced circulation volumes.

Specialist Digital

The revenue and operating profit of the Specialist Digital division is as follows:

The Specialist Digital division includes Trinity Mirror Digital Recruitment, our digital classified recruitment vertical and Rippleffect and Communicator, our digital marketing services businesses.

Following the restructuring of the recruitment sites to focus on the three key brands of GAAPweb, SecsintheCity and TotallyLegal, our recruitment revenues have grown by 8.7%. Our marketing services businesses delivered strong revenue growth of 8.2%.

Operating profit increased by 62.5% or £0.5 million.

Central

The revenue and operating loss of the Central division is as follows:

The Central division includes revenue and costs not allocated to the operational divisions and the share of results of associates. The result for the period was a loss of £2.9 million compared to a loss of £4.2 million in the first half of 2014.

Revenue primarily relates to rental income from surplus office space at the Group's main office at Canary Wharf which increased as more vacant space was leased to third parties.

Costs fell by £0.6 million from £8.9 million to £8.3 million reflecting cost savings.

The increase in the share of results of associates is driven by Local World increasing by £0.3 million to £3.1 million and PA Group increasing by £0.1 million to £0.4 million.

Management Report

Other Items

Pensions

The Group operates a defined contribution pension scheme with contributions and associated costs charged to operating profit.

The defined benefit pension schemes operated by the Group were closed to future accrual in 2010. The Group now has five defined benefit pension schemes following the buyouts of the five smaller schemes in 2014 and 2015.

The valuations of the remaining schemes as at 31 December 2013 were completed on 9 December 2014. Deficit funding contributions were agreed at £36.2 million for 2015, 2016 and 2017. In addition, the Group has agreed that in respect of dividend payments additional contributions would be paid at 50% of the excess if dividends in 2015 were above 5 pence per share. For 2016 and 2017 the threshold increases in line with the increase in dividends capped at 10% per annum.

In December 2014, the Group prepaid contributions for 2015 and 2016 of £16.5 million and £0.5 million respectively and therefore payments due in 2015 are £19.7 million with £9.9 million paid in the first half. The next valuation date of the schemes is 31 December 2016 and valuations are expected to be finalised by the end of 2017.

The accounting pension deficit fell during the first half by £10.4 million from £301.2 million (£241.0 million net of deferred tax) to £290.8 million (£232.6 million net of deferred tax). This fall in the deficit primarily reflects the contributions paid during the first half with changes in the discount rate, inflation and other assumptions collectively having a minimal impact. The decrease in the accounting pension deficit does not impact the agreed funding commitments.

Cash and borrowings

Cash balances of £92.2 million were held at the reporting date.

Contracted debt, assuming that the private placement loan notes and related cross-currency interest rate swaps are not terminated prior to maturity, was £68.3 million. After deducting the £68.3 million of contracted debt due on the private placement loan notes, the Group had contracted net cash of £23.9 million at the reporting date. The final repayment on the private placement loan notes is £68.3 million, due in June 2017.

Statutory debt, which includes the US$ denominated private placement loan notes at the reporting date exchange rate and the related cross-currency interest rate swaps at fair value, fell by £42.1 million from a net debt of £13.1 million to net cash of £29.0 million. The fair value of the Group's cross-currency interest rate swaps was an asset of £1.2 million and the Sterling amount of the private placement loan notes was £64.4 million.

The Group has had no drawings on its £60 million bank facility which remains committed until July 2018.

Related party transactions

There have been no changes in the nature of related party transactions and no material transactions during the first half.

Principal risks and uncertainties

The principal risks and uncertainties together with mitigating actions that affected the Group during the first half and going forward are described on pages 17 and 18 in the Trinity Mirror plc 2014 Annual Report. The current principal risks and uncertainties are:

· Strategy - the overall strategy or elements of the strategy are inappropriate and the delivery of the strategy is badly executed;

· Revenue loss - faster than anticipated loss of revenue from print and failure to deliver new revenue streams to offset print decline and drive revenue growth;

· Historical legal issues - damage to reputation arising from historical events, direct financial impact from legal claims and distraction of senior management time from delivering the strategy; and

· Pensions - pension deficits grow at such a rate so as to affect the viability of the Group itself or so that the annual funding costs consume a disproportionate level of cash flow.

Management Report

Other Itemscontinued

Going concern

In determining whether the Group's half-yearly financial report can be prepared on a going concern basis, the directors considered all factors likely to affect its future development, performance and its financial position, including cash flows, liquidity position and borrowing facilities and the risks and uncertainties relating to business activities.

Having considered all the factors impacting the Group's businesses, including downside sensitivities, the directors are satisfied that the Group will be able to operate within the terms and conditions of the Group financing facilities for the foreseeable future.

The directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the Group's half-yearly financial report.

Board changes

Donal Smith retired from the Board at the conclusion of the Annual General Meeting on 7 May 2015.

Statement of directors' responsibilities

The directors are responsible for preparing the half-yearly financial report in accordance with applicable laws and regulations.

The directors confirm to the best of their knowledge:

a) the consolidated financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union; and

b) the half-yearly financial report includes a fair review of the information required by the Financial Conduct Authority's Disclosure and Transparency Rules 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 4.2.8R (disclosure of related parties transactions and changes therein).

By order of the Board of directors

Simon Fox Vijay Vaghela

Chief Executive Group Finance Director

Consolidated income statement

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

* Adjusted items relate to the exclusion of non-recurring items, restructuring charges in respect of cost reduction measures, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments, the pension finance charge and the pension administrative expenses. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

Consolidated cash flow statement

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

Consolidated balance sheet

at 28 June 2015 (29 June 2014 and 28 December 2014)

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

1. General information

The financial information in respect of the 52 weeks ended 28 December 2014 does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. A copy of the statutory accounts for that period has been delivered to the Registrar of Companies and is available at the Company's registered office at One Canada Square, Canary Wharf, London E14 5AP and on the Company's website at www.trinitymirror.com. The auditors reported on those accounts: their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

The consolidated financial statements for the 26 weeks ended 28 June 2015 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 and have 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 auditors have carried out a review of the consolidated financial statements and their report is set out on page 29.

The consolidated financial statements were approved by the directors on 3 August 2015. This announcement will be made available at the Company's registered office at One Canada Square, Canary Wharf, London E14 5AP and on the Company's website at www.trinitymirror.com.

2. Accounting polices

Basis of preparation

The Group's annual consolidated financial statements are prepared in accordance with IFRS as adopted by the European Union. The consolidated financial statements included in this financial report have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union.

Going concern

Having considered all the factors impacting the Group's businesses, including downside sensitivities, the directors are satisfied that the Group will be able to operate within the terms and conditions of the Group financing facilities for the foreseeable future.

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 Group's half-yearly financial report.

Changes in accounting policy

Except as noted below, the same accounting policies, presentation and methods of computation are followed in the consolidated financial statements as applied in the Group's latest annual consolidated financial statements.

The Group has adopted the following new interpretations during the current financial period which had no impact on the Group:

· IFRIC 21 (Issued) 'Levies' - effective for periods starting on or after 17 June 2014

At the date of approval of these consolidated financial statements the following amended standard, which has not been applied and when adopted will have no material impact on the Group, were in issue but not yet effective:

· IAS 19 (Amended) 'Employee Benefits' - effective for periods beginning on or after 1 February 2015

At the date of approval of these consolidated financial statements the following new and amended standards which have not been applied and when adopted will have no material impact on the Group, were not yet endorsed by the EU and have no effective date:

· IFRS 9 (Issued) 'Financial Instruments'

· IFRS 10 (Amended) 'Consolidated Financial Statements'

· IFRS 11 (Amended) 'Joint Arrangements'

· IFRS 12 (Amended) 'Disclosure of Interests in Other Entities'

· IFRS 15 (Issued) 'Revenue from Contracts with Customers'

· IAS 1 (Amended) 'Presentation of Financial Statements'

· IAS 16 (Amended) 'Property, Plant and Equipment'

· IAS 27 (Amended) 'Separate Financial Statements'

· IAS 28 (Amended) 'Investments in Associates and Joint Ventures'

· IAS 38 (Amended) 'Intangible Assets'

Annual Improvements are implemented when effective and will have no material impact on the Group.

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

2. Accounting polices (continued)

Key sources of estimation uncertainty

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

Impairment of goodwill and other intangible assets

Determining whether goodwill and other intangible assets are impaired requires an estimation of the value in use of the cash-generating unit to which these have been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

Retirement benefits

Actuarial assumptions adopted and external factors can significantly vary the surplus or deficit of defined benefit pension schemes. Advice is sourced from independent actuaries in selecting suitable assumptions.

Provisions

There is uncertainty as to liabilities arising from the outcome or resolution of the ongoing historical legal issues.

Critical judgements in applying the Group's accounting policies

No critical judgements in applying the Group's accounting policies have been identified in the current or preceding year.

3. Operating segments

Operating segments are identified on the basis of internal reports about components of the Group that are regularly reviewed by the Board and chief operating decision maker to allocate resources to the segments and to assess their performance. The Group has four operating segments that are regularly reviewed by the Board and chief operating decision maker.

The operating segments are: Publishing which includes all of our newspapers and associated digital publishing; Printing which provides printing services to the publishing segment and to third parties; Specialist Digital which includes our acquired digital specialist classified and our digital marketing services businesses; and Central which includes revenue and costs not allocated to the operational divisions and our share of results of associates.

The accounting policies used in the preparation of each segment's revenue and results are the same as the Group's accounting policies described in note 2. The Board and chief operating decision maker are not provided with an amount for total assets by segment. The Group's operations are located in the UK and the Group is not subject to significant seasonality during the year.

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

3. Operating segments (continued)

4. Revenue

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

4. Revenue (continued)

5. Non-recurring items

(a) In the first half of 2015 we made a provision of £16.0 million (26 weeks ended 29 June 2014: £4.0 million and 52 weeks ended 28 December 2014: £12.0 million) to cover the costs of dealing with historical legal issues in relation to phone hacking. It remains uncertain as to how these matters will progress, whether further allegations or claims will be made, and their financial impact. Due to this uncertainty a contingent liability has been highlighted in note 17.

(b) Costs associated with the closure of the printing site in Blantyre, Scotland including the non-cash write off of fixed assets of £1.0 million.

(c) Share of the after tax restructuring costs incurred by PA Group. In the prior year, the £27.2 million gain comprised our £27.5 million share of the gain on disposal by PA Group of its weather forecasting business, MeteoGroup, our £0.4 million share of the profit of MeteoGroup recorded by PA Group up to the date of completion less our £0.7 million share of restructuring costs incurred by PA Group and Local World.

6. Investment revenues

7. Finance costs

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

8. Tax

The standard rate of corporation tax reduced from 21% to 20% on 1 April 2015. The blended rate for the accounting year is 20.25% being a mix of 21% up to 31 March 2015 and 20% from 1 April 2015 (2014: 21.5% being a mix of 23% up to 31 March 2014 and 21% from 1 April 2014). The current tax liabilities amounted to £9.3 million (29 June 2014: £15.2 million and 28 December 2014: £12.0 million) at the reporting date.

The tax on actuarial gains/(losses) on defined benefit pension schemes taken to the consolidated statement of comprehensive income is a charge of £1.4 million comprising a deferred tax charge of £2.1 million and a current tax credit of £0.7 million (26 weeks ended 29 June 2014: a credit of £2.5 million comprising of a deferred tax credit of £2.5 million and 52 weeks ended 28 December 2014: a credit of £10.6 million comprising a deferred tax credit of £9.8 million and a current tax credit of £0.8 million).

The tax on share-based payments taken to equity is a charge of £0.3 million (26 weeks ended 29 June 2014: a charge of £3.6 million and 52 weeks ended 28 December 2014: a charge of £3.3 million comprising a deferred tax charge of £3.7 million and a current tax credit of £0.4 million).

9. Dividends

The Board has approved an interim dividend for 2015 of 2 pence per share.

On 7 May 2015 the final dividend proposed for 2014 of 3 pence per share was approved by shareholders at the Annual General Meeting and was paid on 4 June 2015. The total dividend payment amounted to £7.5 million.

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

10. Earnings per share

* Adjusted items relate to the exclusion of non-recurring items, restructuring charges in respect of cost reduction measures, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments, the pension finance charge and the pension administrative expenses. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

Basic earnings per share is calculated by dividing profit for the period attributable to equity holders of the parent by the weighted average number of ordinary shares during the period. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary shares. The weighted average number of potentially dilutive ordinary shares not currently dilutive was 3,067,767 (29 June 2014: 4,312,644 and 28 December 2014: 4,679,307).

* Adjusted items relate to the exclusion of non-recurring, restructuring charges in respect of cost reduction measures, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments, the pension finance charge and the pension administrative expenses. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

The basic earnings per share impact for each non-recurring item disclosed in note 5 are as follows:

Notes to the consolidated financial statements

for the 26 weeks ended 28 June 2015 (26 weeks ended 29 June 2014 and 52 weeks ended 28 December 2014)

11. Notes to the consolidated cash flow statement