Half Yearly Report

RNS Number : 5288W

Trinity Mirror PLC

30 July 2009

 



Trinity Mirror plc
30 July 2009

Half-Yearly Financial Report

for the 26 weeks ended 28 June 2009 

Summary

• Group revenue of £383.0 million (2008: £460.8 million)

• Digital revenue of £18.6 million (2008: £22.3 million)

• Operating profit(1) of £49.1 million (2008: £80.5 million)

• Marginal improvement in advertising revenue trends as we progressed through the period and this is expected to continue for the remainder of the year

• Total costs(1) down by £46 million from £380 million to £334 million during the period reflecting continued benefits of re-engineered business processes, day to day cost management to mitigate the impact of declining revenues and the closure of unprofitable titles. Total costs(1) are expected to fall by £65 million for the full year.

• The targeted structural cost savings from re-engineered business processes and reducing the fixed cost base of the business have been increased by £10 million to £35 million for the full year 2009

• Earnings per share(1) of 8.7 pence (2008: 18.7 pence)

• Group continues to generate cash despite challenging trading environment and restructuring costs with operating cash inflow of £27.2 million in the period 

• Net debt(2) falls by £13.8 million from £384.2 million to £370.4 million

Adjusted results(1)	2009	2008
	26 weeks £m	26 weeks £m
Revenue	383.0	460.8
Operating profit	49.1	80.5
Profit before tax	31.3	70.8
Earnings per share	8.7p	18.7p

(1) Adjusted items relate to the exclusion of non-recurring items of £12.6 million (2008: £89.6 million including £85.0 million impairment of the carrying value of publishing rights and titles of regional newspapers in the Midlands and the South), the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 15 on page 22.

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

Statutory results	2009	2008
	26 weeks £m	26 weeks £m
Revenue	383.0	460.8
Operating profit/(loss)	32.9	(12.7)
Profit/(loss) before tax	2.1	(20.6)
Earnings/(loss) per share	1.1p	(6.2)p
Dividend per share	-	3.2p

Commenting on the results, Sly Bailey, Chief Executive of Trinity Mirror plc said:

'The economic slowdown continued to impact our business throughout the period. However, a combination of prudent cost reduction measures, the introduction of cutting edge IT systems driving new, more efficient ways of publishing, stable financing and more resilient circulation revenue continues to support profitability and positions the business for post recession growth. Our cost actions to date have already contributed to the absolute cost base falling by £46 million in the first half and we would expect costs for the full year to fall by £65 million. Our tight cost management coupled with the strength of our products across media will ensure that the Group delivers positive cash flow from our operations for the full year and provide the Board with confidence that performance for 2009 will be in line with its expectations'

Enquiries

Trinity Mirror

Vijay Vaghela, Group Finance Director	020 7293 3000
Nick Fullagar, Director Corporate Communications	020 7293 3622

  Interim Management Report    

The interim management report, unless otherwise stated, is presented on an adjusted basis to provide a more meaningful comparison of the Group's business performance between 2008 and 2009. Adjusted results exclude the impact of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. 

Summary

During the period, the Group's businesses have been adversely impacted by the UK recession. Rising unemployment, falling car sales, a weak property market and negative GDP growth continued to exert downward pressure on both advertising and circulation revenues.  

However, focused and decisive management action has ensured that profitability has been protected. Targeted cost savings and an embedded culture of ongoing cost mitigation measures across the entire organisation have resulted in a substantial reduction in costs. 

While advertising revenues have fallen to unprecedented levels due to the downturn, we have seen a marginal improvement in the rate of decline as we progressed through the period and this is expected to continue for the remainder of the year. Our advertising performance for the Regionals is in line with the market and we have been able to grow market share of advertising for each of our UK National newspapers.  

Although more resilient, circulation revenues have also been impacted with consumers cutting discretionary spend. As a result, circulation revenue declines have not been fully mitigated by cover price increases. Other revenues, which include contract printing, waste sales, events, reader offers and leaflets, have also declined but this is in part driven by transitional service contracts to businesses disposed in 2007 which ended as expected during the first half of 2008.

The complementary mix of advertising revenues and the more resilient circulation revenues and other revenues continued to ensure that total revenues declined at a lower rate than the reduction in advertising revenues. The Group revenues for the period and year on year change, by category and division, are as follows:

	Regionals	Regionals	Nationals	Nationals	Total	Total
	£m	YoY %	£m	YoY %	£m	YoY %
Advertising	104.0	(34.5)	64.4	(14.4)	168.4	(28.0)
Circulation	36.5	(8.1)	133.3	(3.1)	169.8	(4.2)
Other	14.9	(16.8)	29.9	(5.7)	44.8	(9.7)
Total	155.4	(28.2)	227.6	(6.9)	383.0	(16.9)

Group revenues fell by 16.9% year on year, comprising declines of 28.2% for our Regionals division and 6.9% for our Nationals division. The overall revenue performance of the Group benefited from the more resilient circulation and other revenues and materially lower advertising revenue declines in the Nationals relative to the Regionals. The Regionals were adversely impacted by the sharp declines in classified advertising revenue streams.

Whilst Group digital revenue declined by £3.7 million to £18.6 million due to cyclical factors, the Group continues to increase its audience reach with 16.6 million unique users in June 2009, up 40% year on year. Average monthly unique users in the period were 14.8 million, up 39% year on year. 

Whilst we cannot control the macro-economic environment we have been, and are still taking, significant management action to protect profitability and cash flows in order to maintain a healthy financing position. The benefits arising from the new operating model and other management action have enabled the Group to substantially reduce its fixed cost base. 

The actions we have taken have contributed to the material fall in costs of £46 million from £380 million to £334 million. These initiatives include:

• the closure of unprofitable weekly newspapers during the period;

• further roll out of our new operating model across editorial, advertising and production enabling more efficient publishing and the removal of obsolete processes;

• a recruitment and salary freeze across the Group;

• restructuring of a number of functions enabling us to rationalise our property portfolio thereby further reducing the fixed cost base of the business; and

• re-sizing and simplification of management structures delivering improved focus on our businesses and has increased the pace of change required in this challenging trading environment.

Our confidence in our ability to drive through further cost benefits has enabled us to raise our structural cost savings target for 2009 from £25 million to £35 million. These targeted cost savings are in addition to the benefits of day to day tight management of the cost base to align costs to declining revenues and the reduction in costs through closure of unprofitable titles. In the first half we delivered £20 million of structural cost savings.  

Summary (continued)

Whilst maintaining a high degree of focus on managing costs, we have continued to invest in the business, to launch new digital products, to develop the portfolio and to focus on new areas of revenue. In the period we: 

• launched 5 regional cash-back sites and localmole.co.uk, a new online business directory designed to connect local users with local businesses;

• secured new print contracts with Newsquest in the North and the Kent Messenger Group in the South. In addition, we have secured an extension to print the Daily Mail in our Newcastle print plant until 2020. Having invested in our printing network over the past five years we are now well positioned to maximise external contract print revenues and this will remain a key focus for the future; and

• re-launched the People in May with a crisp, fresh new design, full colour and a new independent political positioning which provides the title with a clear point of market differentiation. Since the re-launch the title's circulation trend and advertising market share has improved and circulation volume market share is stable.

We also continue to tightly manage our balance sheet and net debt position through:

• tight management of working capital; 

• prudent reduction in capital expenditure. We expect capital expenditure of around £25 million in 2009, falling to around £15 million per annum from 2010; and

• disposal and exiting of surplus property. We sold 3 properties and exited 7 properties during the period. The most significant of these was the disposal of our former Birmingham offices which were sold for £5.2 million. In addition, we received £2.0 million of deferred consideration for the disposal in 2008 of land in Cardiff and received the £1.4 million deposit on the previous agreed sale of the Birmingham office when the purchaser was unable to complete the transaction.

All of these actions are contributing to the Group remaining cash generative. This is illustrated by the fact that net debt decreased marginally despite paying £16.2 million in relation to pensions funding in excess of the income statement charge in the period, £5.5 million of capital expenditure and £13.3 million of interest payments. No further material pension deficit funding payments are expected for the remainder of the year. Our actions will ensure that net debt will continue to fall for the remainder of the year.

Our healthy cash generation coupled with the benefits of management actions to protect profitability ensures that we continue to operate comfortably within the terms of our financing facilities. There were no cash drawings on our £178.5 million bank facility at 28 June 2009 and no drawings are expected for the remainder of the year. 

There has been no change in cash funding requirements for the pension schemes during the period. The pension deficit increased during the period from £206.9 million to £275.2 million primarily driven by a decline in real discount rates by 0.75% from 3.75% to 3.00%. This was partially offset by an increase in assets reflecting the cash funding during the period in part reduced by the payment of pensions and a fall in asset values. 

Digital Britain

During the period, the final Digital Britain report was published. We were pleased to see that the report, along with published conclusions from an OFT review which ran in parallel, acknowledged the very significant cyclical and structural issues facing local and regional media.  

We have consistently argued that a change in primary legislation is not necessary to address these issues, simply that the existing merger regime fully recognises that the old narrow definitions of print markets are no longer fit for purpose. The OFT conclusions set out a number of clarifications to the operation of the regime which should be helpful to the sector and amended their guidance to include a new Local Media Assessment conducted by Ofcom in cases relating to local media mergers which raise prima facie competition concerns.  This is a welcome development for the industry.  

Dividend

The Board has concluded that it is prudent not to declare an interim dividend for 2009 (2008: 3.2 pence per share) in view of the continued challenging trading environment that the Group faces.

Outlook

We have seen a gradual improvement in the rate of decline in revenues as we have progressed through the period and this is expected to continue for the remainder of the year. In July 2009, Group revenues fell by 13% year on year with advertising and circulation revenues declining by 23% and 3% respectively. Advertising and circulation revenues fell year on year by 29% and 8% respectively for the Regionals and 10% and 1% respectively for the Nationals.  

Management remain focused on protecting profitability in the short term, whilst positioning the business for post recession growth. A combination of structural cost savings arising from our new operating model, and through day-to-day cost management to align the cost base to falling revenues will ensure the Group comes successfully through the downturn. In the first half of 2009 these initiatives contributed to the absolute cost base falling by £46 million which included £20 million of structural cost savings.  These initiatives will contribute to absolute costs for the full year falling by £65 million (including £35 million of structural cost savings) despite the impact of inflationary cost pressures. At the same time management are focused on the development of the portfolio and new revenues with digital launches such as Mirrorfootball.co.uk and 3am.co.uk for the second half of 2009. 

Management's proven track record of tight cost management combined with the strength of the Group's products across media give the Board confidence that the performance for 2009 will be in line with its expectations.

Looking further ahead the Group has invested in its strong portfolio of brands across print and digital, is developing a more diversified revenue base and has minimal capital expenditure requirements in the medium term. These factors, coupled with secure financing and the actions taken through the current downturn provides the Board with confidence that the Group is well positioned to maximise value when market conditions improve.   

Group Review

Group revenues have fallen by £77.8 million from £460.8 million to £383.0 million with advertising revenues contributing £65.6 million of this fall. A substantial reduction in costs limited the impact of falling revenues on operating profits which fell by £31.4 million from £80.5 million to £49.1 million. Operating margins decreased by 4.7% to 12.8%. 

On a statutory basis revenues fell by £77.8 million from £460.8 million to £383.0 million and operating profits improved by £45.6 million from a loss of £12.7 million to a profit of £32.9 million. 

While the severity of the downturn continues to impact our key digital verticals of recruitment and property we are, however, still seeing growth in display, motors and other categories which grew by 32.5% during the period. Audience growth remains strong and in June 2009 we had 16.6 million unique users, up 40% from June 2008. We remain committed to growing our digital business and have continued to appropriately invest in new launches and remain focused on achieving our target of 24 million unique users by the end of 2010.

Profit before tax fell by £39.5 million from £70.8 million to £31.3 million reflecting the fall in operating profits, a pension finance charge of £5.4 million for the period compared to a £5.7 million pension finance credit in the prior period, a year on year adverse movement of £11.1 million, offset by lower net interest costs reflecting lower interest rates as follows:

	2009	2008	Variance
	£m	£m	£m
Operating profit	49.1	80.5	(31.4)
Pension finance (charge)/credit	(5.4)	5.7	(11.1)
Interest on bank overdrafts, borrowings and finance leases less interest income on bank deposits	(12.4)	(15.4)	(3.0)
Profit before tax	31.3	70.8	(39.5)

On a statutory basis profit before tax improved by £22.7 million from a loss of £20.6 million to a profit of £2.1 million.  

The tax charge of £9.0 million for the period represents 28.8% of profit before tax. The statutory tax credit for the period was £0.6 million reflecting a prior year credit of £1.2 million partially reduced by a current period charge of £0.6 million representing 28.6% of the statutory profit before tax.  

Profit after tax decreased by £27.6 million from £49.9 million to £22.3 million with earnings per share falling by 10.0 pence from 18.7 pence to 8.7 pence. On a statutory basis profit after tax improved by £19.3 million from £16.6 million loss after tax to a £2.7 million profit after tax. Earnings per share on a statutory basis improved by 7.3 pence from a 6.2 pence loss per share to 1.1 pence profit per share. 

Profit before and after tax and earnings per share have been materially impacted by the change in the IAS 19 pension finance charge. For the full year the expected pension finance charge is £10.5 million compared to a pension finance credit in 2008 of £11.4 million, a year on year adverse movement of £21.9 million. 

Capital expenditure for the period was £5.5 million. Planned capital expenditure for 2009 is around £25 million. We envisage capital expenditure will fall to around £15 million per annum thereafter.  Proceeds on disposal of property, plant and equipment amounted to £8.6 million in the period.

Net debt, assuming that the private placement loan notes and related cross-currency interest rate swaps are not terminated prior to maturity (contracted net debt), decreased by £13.8 million from £384.2 million to £370.4 million. On a statutory basis net debt fell by £1.2 million from £348.7 million to £347.5 million.

The Group continues to operate comfortably within its debt covenants. No cash drawings were outstanding on the £178.5 million bank facility at 28 June 2009 although there was a £4.0 million guarantee drawn on the facility at 28 June 2009 which has been released following the repayment of finance leases on 1 July 2009 that were the subject of the guarantees.

No interim dividend is declared for 2009 (2008: 3.2 pence per share).

 Divisional Review

Regionals

The Regionals division publishes an extensive portfolio of brands across print and digital media in the UK. The print portfolio includes over 120 paid for and free newspaper titles. In the majority of our geographical regions, our print titles reach over 70% of the adult population in our markets on a weekly basis. Our digital portfolio includes companion websites to our key newspaper titles, hyper-local sites serving specific postcodes and communities and both local and national sites in the key verticals of recruitment, property and motors.

The adverse economic environment is impacting all consumer facing businesses, in particular regional press with its reliance on the more cyclical classified advertising revenues. Given the impact on revenues we have focused hard on costs to ensure that the business remains profitable. 

The revenue and operating profit of the Regionals division are as follows:

	2009	2008	Variance
	£m	£m	%
Revenue
- Print and other related activities	139.2	196.9	(29.3)
- Digital activities	16.2	19.5	(16.9)
Total revenue	155.4	216.4	(28.2)
Operating profit
- Print and other related activities	13.5	39.7	(66.0)
- Digital activities	3.8	5.8	(34.5)
Total operating profit	17.3	45.5	(62.0)
Operating margin	11.1%	21.0%	(9.9)

Revenue fell by £61.0 million from £216.4 million to £155.4 million. Costs were reduced by £32.8 million from £170.9 million to £138.1 million containing the fall in operating profit by £28.2 million from £45.5 million to £17.3 million. 

Print and other related activities revenues decreased by £57.7 million and operating profit by £26.2 million driven by a significant reduction in advertising revenues. Digital revenues decreased by £3.3 million and operating profit fell by £2.0 million with the impact of the economy also affecting digital revenues, in particular recruitment and property. The advertising revenue reductions are in line with market performance.  

The revenues by category in the Regionals division are as follows:

	2009	2008	Variance
	£m	£m	%
Advertising	104.0	158.8	(34.5)
Circulation	36.5	39.7	(8.1)
Other	14.9	17.9	(16.8)
Total revenue	155.4	216.4	(28.2)

Regionals advertising revenues for the period have fallen by 34.5% reflecting a decline of 36.8% for January and February, 34.7% for March and April and 32.1% for May and June. The trend in advertising revenues reflects the impact of the continued deterioration in the UK economy which is being partially offset by weaker comparatives. By category the performance for the period was display down 21.5%, recruitment down 50.4%, property down 52.5%, motors down 34.4% and other classified categories down 16.0%. Recruitment and property advertising now represent 21.8% and 11.5% respectively of Regionals advertising revenues with 34.2% and 24.3% of these categories respectively coming from digital activities. Therefore, going forward, whilst these categories remain challenging in the short term due to the economic downturn their impact on the overall business is much reduced.  

Regionals circulation revenues for the period have fallen by 8.1% with accelerated volume declines partially offset by cover price increases which continue in line with our 'little and often' cover price policy. During the period we experienced volume declines of 10.7% for the paid for dailies, 12.6% for the paid for Sundays and 13.1% for the paid for weeklies, reflecting the impact of consumers curtailing discretionary spend.

Other revenues for the period have decreased by 16.8%, reflecting a reduction in revenue from service contracts to businesses disposed in 2007 which ended in the first half of 2008 and declines in leaflets, events and reader offers.

Total digital revenues across the Regionals have declined by £3.3 million to £16.2 million with the fall in revenue driven by falling recruitment and property advertising revenues, down by 37.7% and 24.3% respectively. Excluding recruitment and property, total Regionals digital revenues increased by £2.2 million to £5.5 million. Whilst revenues are under pressure due to the cyclical pressures of the recession, monthly unique users across the Regionals websites continue to grow, demonstrating clear growth in audience reach, with 7.2 million unique users in June 2009, up 11% from June 2008.

  Divisional Review (continued)

Nationals

The Nationals division publishes five national newspaper titles which are among the UK's leading media brands. In the UK we publish the Daily Mirror, the Sunday Mirror and The People while in Scotland we publish the two best read national titles, the Daily Record and the Sunday Mail. All our newspapers are complemented by a fast growing portfolio of digital brands plus other commercial activities which include an event marketing division and a portfolio of business titles in Scotland.

The national newspaper market remains highly competitive and saw increased levels of competitor cover price discounting during the period. In spite of this, and the difficult economic conditions, the business performed creditably with the unified management structure across the UK Nationals and Scottish Nationals implemented in September 2008 delivering both revenue and cost benefits across the Nationals portfolio.  

The revenue and operating profit of our Nationals division are as follows:

	2009	2008	Variance
	£m	£m	%
Revenue	227.6	244.4	(6.9)
Operating profit	38.2	42.7	(10.5)
Operating margin	16.8%	17.5%	(0.7)

Revenue decreased by £16.8 million from £244.4 million to £227.6 million. The benefits of tight cost management limited the fall in operating profits to only £4.5 million from £42.7 million to £38.2 million, resulting in a strong margin performance.

The revenues by category in the Nationals division are as follows:

	2009	2008	Variance
	£m	£m	%
Advertising	64.4	75.2	(14.4)
Circulation	133.3	137.5	(3.1)
Other	29.9	31.7	(5.7)
Total revenue	227.6	244.4	(6.9)

Nationals advertising revenues for the period fell by 14.4% reflecting a decline of 15.9% for January and February, 17.5% for March and April and a much reduced 9.4% for May and June. The advertising performance across the period is negatively impacted by the Scottish Nationals having a higher proportion of the more cyclical classified advertising revenues. The UK Nationals saw a stronger advertising performance and each title increased its advertising market share during the period. 

Nationals circulation revenues for the period have fallen by 3.1%. During the period, cover price increases were made for the Monday to Friday editions of the Daily Mirror (40p to 45p) and the Daily Record (35p to 40p), the Saturday edition of the Daily Record (60p to 65p), the Sunday Mirror (95p to £1.00) and the Sunday Mail (£1.20 to £1.30).

The six monthly change in circulation volumes and the six monthly market share for our national titles were as follows:

	2009 Six monthly circulation volume change	2009 Six monthly market share(a)
	%	%
Daily Mirror	(10.3%)	16.7%
Sunday Mirror	(8.5%)	15.8%
The People	(10.5%)	7.5%
Daily Record(b)	(10.3%)	32.8%
Sunday Mail(b)	(10.2%)	35.5%

(a) Share of tabloid market six months to June 2009 excluding sampling

(b) Within Scottish market only

The six monthly circulation volume change reflects increasing pressure on volumes due to the recession as consumers continue to reduce discretionary spend and are also distorted by extensive price cutting in the market. 

Other revenues for the period have decreased by 5.7%, reflecting reduced waste paper sales driven by falling waste paper prices and a marginal fall in other commercial revenues.

Total digital revenues across the Nationals have declined by £0.4 million to £2.4 million. Monthly unique users across the Nationals websites grew to 9.4 million unique users in June 2009, up 74% from June 2008 reflecting strong user engagement.  We continue to focus on building a quality audience which is relevant to our UK advertisers and have the largest proportion of UK unique users at 52% compared to the market average of 36%. 

Central

Central includes costs not allocated to the operational divisions. During the period, costs decreased by £1.1 million from £7.8 million to £6.7 million.

Other Items

Non-recurring items

The Group's impairment review has not resulted in an impairment charge (2008: £85.0 million relating to publishing rights and titles in the Midlands and the South cash generating units).

Restructuring costs in connection with the delivery of cost reduction measures and implementation of the new operating model for the Group amounted to £8.3 million (2008: £4.6 million). We expect the total restructuring costs to be £20 million for 2009, an increase of £5 million from the previously advised £15 million, reflecting the increase in the cost savings target by £10 million for 2009 to £35 million.

Non-recurring items also include a £7.0 million bad debt provision against circulation receivables following agreement reached with a wholesale distributor and a £5.1 million gain on the disposal of a property in Birmingham.

During the period, the Group disposed of Globespan Media Limited for £1 and incurred a loss on disposal of £2.4 million. The subsidiary contributed £0.5 million to revenue and incurred an operating loss of £0.5 million in the period. In the first half of 2008, the subsidiary had revenues of £1.2 million and an operating loss of £0.3 million and for the full year had revenues of £2.8 million and an operating loss of £0.4 million.

Pension costs 

The defined benefit current service cost, excluding past service enhancements, was £8.2 million (2008: £11.8 million) and the pension finance charge in the period was £5.4 million (2008: £5.7 million finance credit). 

For the full year, the defined benefit current service cost, excluding past service enhancements, is expected to be £16.5 million (2008: £24.1 million) with the pension finance charge expected to be £10.5 million (2008: £11.4 million finance credit). The impact of the changes in the pensions operating profit charge and finance amount is to reduce profit before tax for the full year by £14.3 million. The impact of these changes is to reduce 2009 reported earnings per share by 4.0 pence per share.

The IAS 19 pension deficit has increased by £68.3 million from £206.9 million to £275.2 million during the period reflecting the impact of an increase in liabilities of £106.5 million, partially offset by an increase in assets of £6.3 million and a reduction in the asset ceiling of £31.9 million. The increase in liabilities has been driven by a fall in corporate bond rates and an increase in inflation which have contributed to the real discount rate falling by 0.75% from 3.75% to 3.00%. The increase in assets reflects the cash funding partially reduced by the payment of pensions and a fall in asset values. The mortality assumptions are consistent with those adopted at 28 December 2008:

	Future life expectancy (years) for a pensioner currently aged 65		Future life expectancy (years) at age 65 for a non-pensioner currently aged 55
	Male	Female	Male	Female
At 28 June 2009	21.4	23.8	23.2	25.6
At 28 December 2008	21.4	23.8	23.2	25.6
At 29 June 2008	20.6	23.7	22.4	25.6
At 30 December 2007	20.1	23.0	21.6	24.4

The Group continues to fund pension scheme deficits in accordance with funding schedules agreed with the pension scheme trustees. Valuations are undertaken on a triennial basis. In 2008 we completed two of the three major schemes, MIN and Mirror. The TRBS scheme valuation has a valuation date of 30 June 2009 and will be completed in 2010. We expect contributions to the pension schemes, including current service costs, to be around £35 million in 2009 and between £40 million to £50 million per annum from 2010.

Financing

Net debt, on a statutory basis, decreased by £1.2 million from £348.7 million to £347.5 million. The fair value of the Group's cross-currency interest rates swaps which match the principal and interest payments on the Group's US$ denominated loan notes issued as part of the US private placement in 2001 and 2002, at 28 June 2009 was a liability of £11.2 million (28 December 2008: asset of £41.7 million).

Net debt, on a contracted basis, assuming that the private placement loan notes and the cross-currency interest rate swaps are not terminated prior to maturity, has fallen during the period as follows:

	£m
Net debt as at 28 December 2008	384.2
Pension contributions in excess of operating profit charge	16.2
Corporation tax payments	3.7
Interest payments	13.3
Operating cash inflows, capital expenditure, disposals, working capital	(47.0)
Net debt as at 28 June 2009	370.4

An analysis of net debt on a statutory and contracted basis together with a reconciliation between statutory and contracted net debt is shown in note 12.

Other Items (continued)

The majority of the Group's drawn debt, £382 million, is funded through the US private placement markets. No material repayments are due until October 2011 when £145 million is repayable and will be funded through a combination of bank facilities and cash flows. Repayments on the US private placement beyond 2011 are £70 million in June 2012, £55 million in October 2013, £44 million in June 2014 and £68 million in June 2017.

The Group had no cash drawings and a £4.0 million guarantee drawing as at 28 June 2009 on the £178.5 million bank facility which expires in June 2013.

No new financing facilities were procured during the period and no debt facilities were repaid during the period other than in accordance with their normal maturity date.

Subsequent to 28 June 2009 the Group repaid finance leases with a book value of £5.8 million for a total payment of £6.0 million and the associated guarantee drawn from the bank facility has been released.

At 30 July 2009 the Group had no cash or guarantee drawings on the £178.5 million bank facility.

Net debt is expected to fall over the remainder of 2009 and the Group continues to operate comfortably within the financial covenants attached to the Group's financing facilities.

Capital expenditure 

Capital expenditure was £5.5 million against a depreciation charge of £18.0 million. The capital expenditure included £3.5 million on key IT systems for the Group's new operating model and £1.7 million on printing presses.

Disposal proceeds of £8.6 million related to the disposal of our former Birmingham offices which were sold for £6.6 million (including a £1.4 million deposit taken on a previous transaction where the purchaser failed to complete the purchase) and the receipt of £2.0 million of deferred consideration for the disposal in 2008 of land in Cardiff.

Related party transactions

There have been no changes in the nature of the related party transactions described in the Group's annual consolidated financial statements for the 52 weeks ended 28 December 2008 and no material transactions in the period.

Principal risks and uncertainties

The principal risks and uncertainties that affect the Group on an ongoing basis are described in the Group's annual consolidated financial statements for the 52 weeks ended 28 December 2008. These are still considered the most relevant risks and uncertainties at this time. They could have an impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ from expected or historical results.

The key risks specific to the remaining six month period are firstly, that advertising and circulation revenues, representing the core revenue streams for the Group, do not see an easing of the year on year declines experienced in the first six month period and secondly, that key customers or suppliers are unable to continue trading resulting in bad debts and/or disruption to the Group's operations.

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, the condensed consolidated financial statements which should be read in conjunction with the Group's annual consolidated financial statements for the 52 weeks ended 28 December 2008:

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

b) includes a fair review of the information required by the Financial Services 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

Sly Bailey	Vijay Vaghela
Chief Executive	Group Finance Director

This Interim Management Report is prepared for and addressed only to the Company's shareholders as a whole and to no other person. The Company, its directors, employees, agents or advisers do not accept or assume responsibility to any other person to whom this Interim Management Report is shown or into whose hands it may come and any such responsibility or liability is expressly disclaimed.  Statements contained in this Interim Management 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 Interim Management Report involve uncertainty since future events and circumstances can cause results and developments to differ materially from those anticipated. To the extent that this Interim Management 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.

                  Condensed consolidated income statement
                  for the 26 week period to 28 June 2009

	notes	26 weeks to  28 June  2009 (unaudited) £m	26 weeks to  29 June  2008 (unaudited) £m	52 weeks to  28 December  2008  (audited)  £m
Revenue	3,4	383.0	460.8	871.7
Cost of sales		(200.3)	(230.4)	(443.7)
Gross profit		182.7	230.4	428.0
Distribution costs		(42.4)	(49.1)	(92.2)
Administrative expenses:
Non-recurring
- Impairment of intangible assets	5	-	(85.0)	(190.0)
- Other	5	(12.6)	(4.6)	(34.5)
Amortisation of intangible assets		(3.6)	(3.6)	(7.3)
Other		(91.5)	(100.9)	(190.4)
Share of results of associates:
Results before non-recurring items		0.3	0.1	(0.2)
Non-recurring items		-	-	(1.8)
Operating profit/(loss)	4	32.9	(12.7)	(88.4)
Investment revenues	6	0.1	2.4	4.0
Pension finance (charge)/credit	13	(5.4)	5.7	11.4
Finance costs	7	(25.5)	(16.0)	(0.5)
Profit/(loss) before tax		2.1	(20.6)	(73.5)
Tax credit	8	0.6	4.0	14.4
Profit/(loss) for the period attributable to equity holders of the parent		2.7	(16.6)	(59.1)
Earnings per share		Pence	Pence	Pence
Adjusted earnings per share* - basic	10	8.7	18.7	33.4
Adjusted earnings per share* - diluted	10	8.7	18.7	33.4
Earnings/(loss) per share - basic	10	1.1	(6.2)	(22.6)
Earnings/(loss) per share - diluted	10	1.1	(6.2)	(22.6)

* Adjusted items relate to the exclusion of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 15 on page 22.

                  Condensed consolidated statement of recognised income and expense

                  for the 26 week period to 28 June 2009

		26 weeks to  28 June  2009 (unaudited) £m	26 weeks to  29 June  2008 (unaudited) £m	52 weeks to  28 December  2008  (audited)  £m
Actuarial losses on defined benefit pension schemes taken to equity	13	(79.1)	(94.0)	(157.1)
Tax on actuarial losses on defined benefit pension schemes taken to equity	8	22.1	26.3	44.0
Share of items recognised in equity by associates		(1.7)	0.1	0.1
Net loss recognised directly in equity		(58.7)	(67.6)	(113.0)
Profit/(loss) for the period attributable to equity holders of the parent		2.7	(16.6)	(59.1)
Total recognised income and expense for the period attributable to equity holders of the parent	14	56.0	(84.2)	(172.1)

                  Condensed consolidated balance sheet

                  at 28 June 2009

	notes	28 June  2009  (unaudited) £m	29 June  2008 (unaudited)  £m	28 December 2008  (audited)  £m
Non-current assets
Goodwill		76.4	80.1	77.0
Other intangible assets		874.9	989.0	879.6
Property, plant and equipment		434.0	459.9	448.7
Investment in associates		6.1	9.6	7.5
Deferred tax assets		77.2	50.9	58.1
Derivative financial instruments	12	-	-	41.7
		1,468.6	1,589.5	1,512.6
Current assets
Inventories		6.2	6.1	7.6
Trade and other receivables		113.1	142.3	121.6
Cash and cash equivalents	12	22.0	32.1	20.6
		141.3	180.5	149.8
Total assets		1,609.9	1,770.0	1,662.4
Non-current liabilities
Borrowings	12	(348.0)	(293.5)	(388.3)
Obligations under finance leases	12	(4.9)	(8.3)	(7.6)
Retirement benefit obligation	13	(275.2)	(145.2)	(206.9)
Deferred tax liabilities		(321.4)	(345.0)	(325.4)
Provisions		(9.4)	(5.3)	(10.6)
Derivative financial instruments	12	(11.2)	(88.4)	-
		(970.1)	(885.7)	(938.8)
Current liabilities
Borrowings	12	(0.6)	(48.5)	(10.0)
Trade and other payables		(134.5)	(165.0)	(143.0)
Current tax liabilities		(12.7)	(19.9)	(16.0)
Obligations under finance leases	12	(2.3)	(2.9)	(3.0)
Provisions		(7.0)	(4.6)	(14.8)
Derivative financial instruments	12	(2.5)	(14.5)	(2.1)
		(159.6)	(255.4)	(188.9)
Total liabilities		(1,129.7)	(1,141.1)	(1,127.7)
Net assets		480.2	628.9	534.7
Equity
Share capital	14	(25.8)	(25.8)	(25.8)
Share premium account	14	(1,120.5)	(1,120.5)	(1,120.5)
Capital redemption reserve	14	(4.3)	(4.3)	(4.3)
Retained earnings and other reserves	14	670.4	521.7	615.9
Total equity attributable to equity holders of the parent		(480.2)	(628.9)	(534.7)

                  Condensed consolidated cash flow statement

                  for the 26 week period to 28 June 2009

	notes	26 weeks to  28 June  2009  (unaudited) £m	26 weeks to  29 June  2008  (unaudited) £m	52 weeks to  28 December  2008  (audited)  £m
Cash flows from operating activities
Cash generated from operations	11	27.2	14.5	102.3
Income tax (paid)/received		(3.7)	1.1	(1.2)
Net cash inflow from operating activities		23.5	15.6	101.1
Investing activities
Interest received		0.1	2.4	4.0
Proceeds on disposal of businesses		-	-	0.2
Proceeds on disposal of property, plant and equipment		8.6	-	4.0
Purchases of property, plant and equipment		(5.5)	(30.5)	(54.1)
Acquisition of subsidiary undertakings		-	(5.1)	(5.1)
Net cash from/(used in) investing activities		3.2	(33.2)	(51.0)
Financing activities
Dividends paid	9	-	(40.3)	(48.4)
Interest paid on borrowings		(13.0)	(17.4)	(35.5)
Interest paid on finance leases		(0.3)	(0.4)	(0.8)
Increase in borrowings		-	-	10.0
Repayment of borrowings	12	(10.0)	-	(61.4)
Repayment of obligations under finance leases	12	(2.6)	(2.4)	(2.6)
Purchase of shares under share buy-back programme		-	(101.5)	(101.8)
Increase/(decrease) in bank overdrafts	12	0.6	0.1	(0.6)
Net cash used in financing activities		(25.3)	(161.9)	(241.1)
Net increase/(decrease) in cash and cash equivalents	12	1.4	(179.5)	(191.0)
Cash and cash equivalents at the beginning of period	12	20.6	211.6	211.6
Cash and cash equivalents at the end of period	12	22.0	32.1	20.6

Notes to the condensed consolidated financial statements

1. General information

The financial information in respect of the 52 weeks ended 28 December 2008 does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The statutory accounts for this period have been filed with the Registrar of Companies. The auditors' report on these accounts was unqualified, did not include reference to any matters to which the auditors drew attention by way of emphasis of matter without qualifying the report and did not contain a statement under Sections 237 (2) or (3) of the Companies Act 1985.

The condensed consolidated financial statements for the 26 weeks ended 28 June 2009 do not constitute statutory accounts within the meaning of Section 435 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 condensed consolidated financial statements and their report is set out on page 23.

The condensed consolidated financial statements were approved by the directors on 30 July 2009. 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 policies

International Financial Reporting Standards ('IFRS')

The Group presents its annual consolidated financial statements in accordance with IFRS as adopted by the European Union. The condensed consolidated financial statements included in this half-yearly financial report have been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union.

Basis of preparation

The Group's business activities and the factors likely to affect its future development and performance together with the financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the half-yearly financial report in the interim management report on pages 2 to 9 and condensed consolidated financial statements on pages 10 to 22. 

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 half-yearly financial report.

Basis of Accounting

The accounting policies used in the preparation of the condensed consolidated financial statements for the 26 weeks ended 28 June 2009 have been consistently applied to all the periods presented and are as set out in the Group's annual consolidated financial statements for the 52 weeks ended 28 December 2008 which are 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.

Changes in accounting policy

At the date of approval of these condensed consolidated financial statements a number of Standards and Interpretations, which have not been applied, were in issue but not yet effective. The directors anticipate that the adoption of these Standards and Interpretations in future periods will have no material impact on the financial statements other than the requirement for additional segment disclosure when IFRS 8 comes into effect and the impact of IFRIC 14 which is disclosed in note 13.

Critical judgements in applying the Group's accounting policies

In applying the entity's accounting policies, management has made certain judgements in respect of the identification of intangible assets based on pre-acquisition forecasts and market analysis. The initial valuations of acquired intangible assets are reviewed for impairment at each reporting date or more frequently if necessary. These judgements have the most significant effect on the amounts recognised in the Group's annual consolidated financial statements.

Key sources of estimation uncertainty

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

Notes to the condensed consolidated financial statements

(continued)

3.     Revenue

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to 28 December 2008 (audited) £m
Circulation	169.8	177.2	426.5
Advertising	168.4	234.0	345.3
Other	44.8	49.6	99.9
Total	383.0	460.8	871.7

4.     Business and geographical segments

For management purposes, the operations of the Group are currently organised into the following divisions: Regionals, Nationals and Central. These divisions are the basis on which the Group reports its primary segment information. The secondary reporting segment is a geographical source analysis.

The Regionals division publishes a large portfolio of newspaper and online brands across the UK. The Nationals division publishes two daily and three Sunday newspapers and related online brands and activities. Central includes costs not attributed to the Regionals or Nationals divisions. The revenues and costs of each segment are clearly identifiable and allocated according to where they arise.

The Group is not subject to significant seasonality between the first and second half of its financial year.

Primary segments - business segment analysis

26 weeks to 28 June 2009 (unaudited)	Regionals 2009 £m	Nationals  2009  £m	Central 2009 £m	Total 2009 £m
Revenue
Segment sales	159.8	231.1	-	390.9
Inter-segment sales	(4.4)	(3.5)	-	(7.9)
Total revenue	155.4	227.6	-	383.0
Operating profit/(loss) before associates and non-recurring	13.7	38.2	(6.7)	45.2
Share of results of associates before non-recurring items	-	-	0.3	0.3
Non-recurring items including share of associates	2.1	(6.4)	(8.3)	(12.6)
Operating profit/(loss) by segment	15.8	31.8	(14.7)	32.9
Investment revenues				0.1
Pension finance charge				(5.4)
Finance costs				(25.5)
Profit before tax				2.1
Tax credit				0.6
Profit for the period				2.7

26 weeks to 29 June 2008 (unaudited)	Regionals 2008 £m	Nationals  2008  £m	Central 2008 £m	Total 2008 £m
Revenue
Segment sales	219.9	247.2	-	467.1
Inter-segment sales	(3.5)	(2.8)	-	(6.3)
Total revenue	216.4	244.4	-	460.8
Operating profit/(loss) before associates and non-recurring	41.9	42.7	(7.8)	76.8
Share of results of associates before non-recurring items	-	-	0.1	0.1
Non-recurring items including share of associates	(85.0)	-	(4.6)	(89.6)
Operating (loss)/profit by segment	(43.1)	42.7	(12.3)	(12.7)
Investment revenues				2.4
Pension finance credit				5.7
Finance costs				(16.0)
Loss before tax				(20.6)
Tax credit				4.0
Loss for the period				(16.6)

Notes to the condensed consolidated financial statements

(continued)

4. Business and geographical segments (continued)

52 weeks to 28 December 2008 (audited)	Regionals 2008 £m	Nationals  2008  £m	Central 2008 £m	Total 2008 £m
Revenue
Segment sales	401.4	482.8	-	884.2
Inter-segment sales	(5.4)	(7.1)	-	(12.5)
Total revenue	396.0	475.7	-	871.7
Operating profit/(loss) before associates and non-recurring	60.9	88.9	(11.7)	138.1
Share of results of associates before non-recurring items	-	-	(0.2)	(0.2)
Non-recurring items including share of associates	(199.4)	-	(26.9)	(226.3)
Operating (loss)/profit by segment	(138.5)	88.9	(38.8)	(88.4)
Investment revenues				4.0
Pension finance credit				11.4
Finance costs				(0.5)
Loss before tax				(73.5)
Tax credit				14.4
Loss for the period				(59.1)

Secondary segments - geographical source segment analysis

The Group's operations are located in the United Kingdom. The Group's revenue by geographical market is set out below:

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to 28 December 2008 (audited) £m
United Kingdom and Republic of Ireland	380.1	458.1	863.7
Continental Europe	2.6	2.4	6.6
Rest of World	0.3	0.3	1.4
Total	383.0	460.8	871.7

5. Non-recurring items 

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Impairment of intangible assets (a)	-	85.0	190.0
Restructuring costs (b)	8.3	4.6	25.1
Profit on disposal of land and buildings (c)	(5.1)	-	(4.6)
Loss/(profit) on disposal of businesses (d)	2.4	-	(0.3)
Impairment of receivables (e)	7.0	-	-
Impairment of fixed assets (f)	-	-	14.3
Non-recurring items included in administrative expenses	12.6	89.6	224.5
Non-recurring items included in share of results of associates (g)	-	-	1.8
Total non-recurring items	12.6	89.6	226.3

(a) An impairment review of the carrying value of the Group's intangible assets undertaken in accordance with IAS 36 indicated that no impairment charge was required (26 weeks to 29 June 2008: £85.0 million and 52 weeks to 28 December 2008: £190.0 million). The impairment charge in 2008 was based on comparing carrying value with value in use and reduced the carrying value of the publishing rights and titles relating to the Midlands and the South cash generating units as a result of advertising revenue falls.

(b) Restructuring costs of £8.3 million (26 weeks to 29 June 2008: £4.6 million and 52 weeks to 28 December 2008: £25.1 million) were incurred in delivery of cost-reduction measures and implementation of a new operating model for the Group.

(c) The Group disposed of surplus land and buildings releasing a profit on disposal of £5.1 million (26 weeks to 29 June 2008: nil million and 52 weeks to 28 December 2008: £4.6 million).

(d) The Group disposed of Globespan Media Limited incurring a loss on disposal of £2.4 million. In 2008, certain newspaper titles within the Midlands were disposed of realising a profit on disposal of £0.3 million.

(e) Impairment of receivables relates to a bad debt provision against circulation receivables following an agreement reached with a wholesale distributor.

(f) In 2008, an impairment of fixed assets was made following the decision to close the print site in Liverpool.

(g) In 2008, included in the share of results of associates was the Group's share of non-recurring items.

Notes to the condensed consolidated financial statements

(continued)

6. Investment revenues

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Interest income on bank deposits	0.1	2.4	4.0

7. Finance costs

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Interest on bank overdrafts and borrowings	12.2	17.4	35.6
Interest on obligations under finance leases	0.3	0.4	0.8
Total interest expense	12.5	17.8	36.4
Fair value loss/(gain) on cross-currency interest rate swaps	53.3	(0.8)	(140.1)
Foreign exchange (gain)/loss on retranslation of borrowings	(40.3)	(1.0)	104.2
Finance costs	25.5	16.0	0.5

8. Tax

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Current tax
Corporation tax charge for the period	(5.5)	(5.8)	(28.6)
Prior period adjustment	0.4	9.1	12.1
Current tax (charge)/credit	(5.1)	3.3	(16.5)
Deferred tax
Deferred tax credit for the period	4.9	9.8	47.9
Tax legislation changes*	-	-	(7.7)
Prior period adjustment	0.8	(9.1)	(9.3)
Deferred tax credit	5.7	0.7	30.9
Total tax credit	0.6	4.0	14.4
Reconciliation of tax charge	%	%	%
Standard rate of corporation tax	(28.0)	(28.5)	(28.5)
Tax effect of items that are not deductible in determining taxable profit/(loss)	(11.6)	8.2	3.4
Tax effect of items that are not taxable in determining taxable profit/(loss)	7.1	-	(1.7)
Tax effect of share of results of associate	4.0	(0.1)	0.8
Impact on the current period deferred tax charge of tax legislation changes	-	1.0	9.4
Prior period adjustment	57.1	-	(3.0)
Tax charge rate	28.6	(19.4)	(19.6)

* In 2008, tax legislation changes related to the impact of the phasing out of Industrial Buildings Allowance.

The standard rate of corporation tax is the UK prevailing rate of 28% (2008: 28.5% being a mix of 30% up to 31 March 2008 and 28% from 1 April 2008).

In 2008, the deferred tax credit included a credit of £23.8 million for the 26 weeks to 29 June 2008 and a credit of £53.2 million for the 52 weeks to 28 December 2008 in relation to the impairment charge with respect to intangible assets and a credit of £nil million for the 26 weeks to 29 June 2008 and a credit of £4.0 million for the 52 weeks to 28 December 2008 in relation to the impairment of fixed assets.

The tax on actuarial losses on defined benefit pension schemes taken to equity of £22.1 million (26 weeks to 29 June 2008: £26.3 million and 52 weeks to 28 December 2008: £44.0 million) comprises current tax of £4.7 million (26 weeks to 29 June 2008: £nil million and 52 weeks to 28 December 2008: £21.4million) and deferred tax of £17.4 million (26 weeks to 29 June 2008: £26.3 million and 52 weeks to 28 December 2008: £22.6 million).

  Notes to the condensed consolidated financial statements

(continued)

9. Dividends

No interim dividend is declared for the 53 weeks to 3 January 2010 (52 weeks to 28 December 2008: 3.2 pence per share). In 2008, £48.4 million (18.7 pence per share) was paid in dividends being £40.3 million in respect of the final dividend for the 52 weeks to 30 December 2007 (15.5 pence per share) and £8.1 million in respect of the interim dividend for the 52 weeks to 28 December 2008 (3.2 pence per share).

10. Earnings per share

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Profit after tax before adjusted items*	22.3	49.9	87.3
Adjusted items*:
- Non-recurring items (after tax)	(7.6)	(65.2)	(159.3)
- Amortisation of intangibles (after tax)	(2.6)	(2.6)	(5.3)
- Impact of the fair value gain on derivative financial instruments (after tax)	(38.4)	0.5	100.9
- Foreign exchange gain/(loss) on retranslation of borrowings (after tax)	29.0	0.8	(75.0)
- Tax legislation changes	-	-	(7.7)
Profit/(loss) for the period attributable to equity holders of the parent	2.7	(16.6)	(59.1)

* Adjusted items relate to the exclusion of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 15 on page 22.

	Thousand	Thousand	Thousand
Weighted average number of ordinary shares for basic earnings per share	255,659	266,916	261,350
Effect of potential ordinary shares in respect of share options	31	-	-
Weighted average number of ordinary shares for diluted earnings per share	255,690	266,916	261,350

Basic earnings per share are calculated by dividing profit attributable to equity holders by the weighted average number of ordinary shares during the period. Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares in issue on the assumption of conversion of all potentially dilutive ordinary shares.

Earnings per share	Pence	Pence	Pence
Adjusted earnings* per share - basic	8.7	18.7	33.4
Adjusted earnings* per share - diluted	8.7	18.7	33.4
Earnings/(loss) per share - basic	1.1	(6.2)	(22.6)
Earnings/(loss) per share - diluted	1.1	(6.2)	(22.6)

* Adjusted items relate to the exclusion of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 15 on page 22.

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

	Pence	Pence	Pence
Impairment of intangible assets	-	(22.9)	(52.3)
Restructuring costs	(2.3)	(1.5)	(6.0)
Profit on disposal of land and buildings	2.2	-	1.8
(Loss)/profit on disposal of businesses	(0.8)	-	0.1
Impairment of receivables	(2.0)	-	-
Impairment of fixed assets	-	-	(3.9)
Loss per share - non-recurring items included in administrative expenses	(2.9)	(24.4)	(60.3)
Loss per share - non-recurring items included in share of results of associates	-	-	(0.7)
Loss per share - total non-recurring items	(2.9)	(24.4)	(61.0)

Notes to the condensed consolidated financial statements

(continued)

11.    Notes to the cash flow statement

	26 weeks to 28 June 2009  (unaudited) £m	26 weeks to 29 June 2008 (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Operating profit/(loss) from continuing operations	32.9	(12.7)	(88.4)
Depreciation of property, plant and equipment	18.0	17.8	38.0
Amortisation of other intangible assets	3.6	3.6	7.3
Share of results of associate	(0.3)	(0.1)	2.0
Impairment of other intangible assets	-	85.0	190.0
Impairment of fixed assets	-	-	14.3
Charge for share-based payments	1.8	2.0	4.0
Profit on disposal of land and buildings	(5.1)	-	(4.6)
Loss/(profit) on disposal of businesses	2.4	-	(0.3)
Pension funding in excess of income statement charge*	(16.2)	(67.9)	(63.6)
Operating cash flows before movements in working capital	37.1	27.7	98.7
Decrease/(increase) in inventories	1.4	0.6	(0.8)
Decrease in receivables	6.0	1.2	23.8
Decrease in payables	(17.3)	(15.0)	(19.4)
Cash flows from operating activities	27.2	14.5	102.3

* In 2008, this included £53.8 million of special contributions.

12. Net debt

The statutory net debt for the Group is as follows:

	28 December 2008  (audited) £m	Cash flow £m	Consolidated income statement* £m	Loans repaid/ (drawn) £m	Other  non-cash changes £m	28 June  2009 (unaudited) £m
Non-current liabilities
Loan notes	(388.3)	-	40.3	-	-	(348.0)
Derivative financial instruments	-	-	(11.2)	-	-	(11.2)
Obligations under finance leases	(7.6)	-	-	-	2.7	(4.9)
	(395.9)	-	29.1	-	2.7	(364.1)
Current liabilities
Bank overdrafts	-	(0.6)	-	-	-	(0.6)
Bank facility	(10.0)	-	-	10.0	-	-
Derivative financial instruments	(2.1)	-	(0.4)	-	-	(2.5)
Obligations under finance leases	(3.0)	-	-	2.6	(1.9)	(2.3)
	(15.1)	(0.6)	(0.4)	12.6	(1.9)	(5.4)
Non-current assets
Derivative financial instruments	41.7	-	(41.7)	-	-	-
	41.7	-	(41.7)	-	-	-
Current assets
Cash and cash equivalents	20.6	1.4	-	-	-	22.0
	20.6	1.4	-	-	-	22.0
Net debt	(348.7)	0.8	(13.0)	12.6	0.8	(347.5)

* The impact on the loan notes of translation into sterling at the reporting date exchange rate and the impact on the derivative financial instruments of being stated at fair value at the reporting date are included in the consolidated income statement within finance costs as set out in note 7.

Cash and cash equivalents represents the sum of the Group's bank balances and cash in hand at the reporting date. 

The US private placement loan notes totalling US$522 million and £26 million were issued in 2001 and 2002. On the issue date the capital repayments and fixed rate interest and on the US$ denominated loan notes were swapped into floating rate sterling through the use of cross-currency interest rate swaps. As hedge accounting under IAS 39 has not been applied, the loan notes and cross-currency interest rate swaps are shown separately in accordance with IAS 39. The loan notes are disclosed at amortised cost and translated into sterling at the reporting date exchange rate and the cross-currency interest rate swaps are disclosed at fair value at the reporting date. These values do not represent the amounts required to repay the loan notes or cancel the related cross-currency interest rate swaps.

Notes to the condensed consolidated financial statements

(continued)

12. Net debt (continued)

The contracted net debt for the Group, assuming that the private placement loan notes and the cross-currency interest rate swaps are not terminated prior to maturity, is as follows:

	28 December 2008  (audited) £m	Cash flow £m	Consolidated income statement £m	Loans repaid/ (drawn) £m	Other  non-cash changes £m	28 June  2009 (unaudited) £m
Non-current liabilities
Loan notes	(382.1)	-	-	-	-	(382.1)
Obligations under finance leases	(7.6)	-	-	-	2.7	(4.9)
	(389.7)	-	-	-	2.7	(387.0)
Current liabilities
Bank overdrafts	-	(0.6)	-	-	-	(0.6)
Bank facility	(10.0)	-	-	10.0	-	-
Derivative financial instruments	(2.1)	-	(0.4)	-	-	(2.5)
Obligations under finance leases	(3.0)	-	-	2.6	(1.9)	(2.3)
	(15.1)	(0.6)	(0.4)	12.6	(1.9)	(5.4)
Current assets
Cash and cash equivalents	20.6	1.4	-	-	-	22.0
	20.6	1.4	-	-	-	22.0
Net debt	(384.2)	0.8	(0.4)	12.6	0.8	(370.4)

The statutory net debt reconciles to the contracted net debt as follows:

	28 June  2009 (unaudited) £m	28 December 2008 (audited) £m
Statutory net debt	347.5	348.7
Loan notes at period end exchange rate	(348.0)	(388.3)
Loan notes at swapped exchange rates	382.1	382.1
Cross-currency interest rate swaps	(11.2)	41.7
Contracted net debt	370.4	384.2

13. Retirement benefit schemes

Defined benefit pension schemes

The Group operates 10 defined benefit pension schemes for certain employees which were closed to new employees with effect from 1 January 2003. All new employees are entitled to participate in a defined contribution plan, the Trinity Mirror Pension Plan.

Formal valuations of the defined benefit pension schemes are carried out regularly. The actuarial methods and assumptions used to calculate each scheme's assets and liabilities vary according to the actuarial and funding policies adopted by their respective trustees. All of the schemes are being funded in accordance with the recommendations of the respective actuaries. The most significant of the schemes are the Mirror Group Pension Scheme (the 'Old Scheme'), the MGN Past Service Pension Scheme (the 'Past Service Scheme'), the MGN Pension Scheme (the 'MGN Scheme'), the Trinity Retirement Benefit Scheme (the 'Trinity Scheme') and the Midland Independent Newspapers Pension Scheme (the 'MIN Scheme') which together represent over 96% of the aggregate value of the scheme's assets. The full actuarial valuation of the Trinity Scheme was completed in September 2007, the MIN Scheme was completed in June 2008 and the Old Scheme, the Past Service Scheme and the MGN Scheme were completed in October 2008. The valuations did not result in an increase in the annual deficit funding payments.

For the purposes of the Group's condensed consolidated financial statements, valuations have been performed in accordance with the requirements of IAS 19 with scheme liabilities calculated using a consistent projected unit valuation method and compared to the value of the scheme assets at 26 June 2009, the last day prior to the period end for which such values were available.

IFRIC14 has not been adopted early, and the estimate of the impact on the deficit at 28 June 2009 being an increase of £9.2 million (29 June 2008 £13.2 million and 28 December 2008 £21.4 million).

  Notes to the condensed consolidated financial statements

(continued)

13. Retirement benefit schemes (continued)

Defined benefit pension schemes (continued)

The assets and liabilities of the most significant schemes included above as at the reporting date are:

	Old Scheme/Past Service Scheme £m	MGN Scheme £m	Trinity Scheme £m	MIN Scheme  £m
Present value of scheme liabilities	(694.6)	(326.6)	(268.0)	(159.0)
Fair value of scheme assets	517.9	243.5	284.1	143.6
Effect of asset ceiling	-	-	(16.1)	-
Scheme deficits included in non-current liabilities	(176.7)	(83.1)	-	(15.4)

Based on actuarial advice, the assumptions used in calculating the scheme liabilities and the actuarial value of those liabilities and the actual return on scheme assets are:

Principal annual actuarial assumptions used:	28 June  2009  %	29 June 2008  %	28 December 2008 %
Discount rate	6.25	6.60	6.50
Inflation rate	3.25	4.00	2.75
Expected return on scheme assets	4.80-6.70	4.50-7.10	4.80-6.70
Expected rate of salary increases	3.50	5.05	3.25
Pension increases:
- Pre 6 April 1997 pensions	3.15-5.00	3.00-5.00	3.00-5.00
- Post 6 April 1997 pensions	3.15-5.00	4.00	3.00-3.50
- In deferment	3.25	4.00	2.75

	28 June  2009  £m	29 June 2008  £m	28 December 2008 £m
Actuarial value of scheme liabilities	1,485.3	1,544.1	1,378.8
Actual return on scheme assets	16.7	(99.7)	(250.8)

Post-retirement mortality tables and future life expectancies at age 65 are:

	Future life expectancy (years) for a pensioner currently aged 65		Future life expectancy (years) at age 65 for a non-pensioner currently aged 55
	Male	Female	Male	Female
At 28 June 2009	21.4	23.8	23.2	25.6
At 28 December 2008	21.4	23.8	23.2	25.6
At 29 June 2008	20.6	23.7	22.4	25.6
At 30 December 2007	20.1	23.0	21.6	24.4

The amount included in the consolidated balance sheet, consolidated income statement and consolidated statement of recognised income and expense arising from the Group's obligations in respect of its defined benefit pension schemes is as follows:

	28 June  2009 (unaudited)  £m	29 June 2008 (unaudited)  £m	28 December 2008 (audited) £m
Present value of scheme liabilities	(1,485.3)	(1,544.1)	(1,378.8)
Fair value of scheme assets	1,239.9	1,409.8	1,233.6
Effect of asset ceiling	(29.8)	(10.9)	(61.7)
Scheme deficits included in non-current liabilities	(275.2)	(145.2)	(206.9)

Fair value of scheme assets:
UK equities	241.6	362.0	250.1
US equities	67.2	133.6	66.1
Other overseas equities	177.6	212.1	183.1
Property	2.8	0.5	3.7
Corporate bonds	418.3	319.5	361.3
Fixed interest gilts	64.5	82.6	63.4
Index-linked gilts	169.7	164.6	169.8
Cash	98.2	134.9	136.1
Fair value of scheme assets	1,239.9	1,409.8	1,233.6

Notes to the condensed consolidated financial statements

(continued)

13. Retirement benefit schemes (continued)

Defined benefit pension schemes (continued)

	26 weeks to 28 June  2009  (unaudited) £m	26 weeks to 29 June 2008  (unaudited) £m	52 weeks to  28 December 2008 (audited) £m
Current service cost	8.2	11.8	24.1
Past service costs	0.9	0.8	2.3
Total included in staff costs	9.1	12.6	26.4
Expected return on scheme assets	(38.1)	(49.4)	(98.7)
Interest cost on pension scheme liabilities	43.5	43.7	87.3
Pension finance charge/(credit)	5.4	(5.7)	(11.4)
Total included in the consolidated income statement	14.5	6.9	15.0
Actuarial losses	(111.0)	(128.3)	(140.6)
Effect of asset ceiling	31.9	34.3	(16.5)
Consolidated statement of recognised income and expense	(79.1)	(94.0)	(157.1)
Movement in deficits during the period
Opening deficits	(206.9)	(124.8)	(124.8)
Contributions	25.3	80.5	90.0
Total included in the consolidated income statement	(14.5)	(6.9)	(15.0)
Consolidated statement of recognised income and expense	(79.1)	(94.0)	(157.1)
Closing deficits	(275.2)	(145.2)	(206.9)

Defined contribution pension schemes

Current service cost

0.6

0.6

1.2

Notes to the condensed consolidated financial statements

(continued)

14. Share capital and reserves

	Share capital £m	Share premium £m	Capital redemption reserve £m	Retained earnings and other reserves £m	Total £m
At 28 December 2008 (audited)	(25.8)	(1,120.5)	(4.3)	615.9	(534.7)
Total recognised income and expense	-	-	-	56.0	56.0
Credit to equity for equity settled share-based payments	-	-	-	(1.5)	(1.5)
At 28 June 2009 (unaudited)	(25.8)	(1,120.5)	(4.3)	670.4	(480.2)

The capital redemption reserve represents the nominal value of the shares purchased and subsequently cancelled under the share buy-back programme. Shares purchased by the Trinity Mirror Employees' Benefit Trust, are included in retained earnings and other reserves at £11.9 million (29 June 2008 and 28 December 2008: £11.9 million), classified as Treasury Shares. Cumulative goodwill written off to reserves in respect of continuing businesses acquired prior to 1998 is £25.9 million (29 June 2008 and 28 December 2008: £25.9 million).

During the period 1,327,364 (26 weeks to 29 June 2008 and 52 weeks to 28 December 2008: 1,591,840) share awards were granted to senior managers on a discretionary basis under the Long Term Incentive Plan approved in 2004. The exercise price of the granted awards is £1 for each block of awards granted. The awards vest after three years, subject to the continued employment of the participant and satisfaction of certain performance conditions.

During the period 30,977 (26 weeks to 29 June 2008 and 52 weeks to 28 December 2008: 709,100) share awards were granted to senior managers on a discretionary basis under the Deferred Share Award Plan approved in 2006. The exercise price of the granted awards is £1 for each block of awards granted. The awards vest after three years, subject to continued employment of the participant.

15. Reconciliation of statutory results to adjusted results

26 weeks to  28 June 2009 (unaudited)	Statutory result £m	Non-recurring items (a) £m	Amortisation (b) £m	Finance costs (c) £m	Tax legislation changes (d) £m	Adjusted result  £m
Revenue	383.0	-	-	-	-	383.0
Operating profit	32.9	12.6	3.6	-	-	49.1
Profit before tax	2.1	12.6	3.6	13.0	-	31.3
Profit after tax	2.7	7.6	2.6	9.4	-	22.3
Earnings per share (pence):	1.1	2.9	1.0	3.7	-	8.7

26 weeks to  29 June 2008 (unaudited)	Statutory result £m	Non-recurring items (a) £m	Amortisation (b) £m	Finance costs (c) £m	Tax legislation changes (d) £m	Adjusted result  £m
Revenue	460.8	-	-	-	-	460.8
Operating (loss)/profit	(12.7)	89.6	3.6	-	-	80.5
(Loss)/profit before tax	(20.6)	89.6	3.6	(1.8)	-	70.8
(Loss)/profit after tax	(16.6)	65.2	2.6	(1.3)	-	49.9
(Loss)/earnings per share (pence):	(6.2)	24.4	1.0	(0.5)	-	18.7

52 weeks to  28 December 2008 (audited)	Statutory result £m	Non-recurring items (a) £m	Amortisation (b) £m	Finance costs (c) £m	Tax legislation changes (d) £m	Adjusted result  £m
Revenue	871.7	-	-	-	-	871.7
Operating (loss)/profit	(88.4)	226.3	7.3	-	-	145.2
(Loss)/profit before tax	(73.5)	226.3	7.3	(35.9)	-	124.2
(Loss)/profit after tax	(59.1)	159.3	5.3	(25.9)	7.7	87.3
(Loss)/earnings per share (pence):	(22.6)	61.0	2.0	(9.9)	2.9	33.4

(a) Details of non-recurring items are set out in note 5.

(b) Amortisation of other intangible assets.

(c) Impact of the translation of foreign currency borrowings and fair value changes on derivative financial instruments.

(d) In 2008, tax legislation changes related to the impact of the phasing out of Industrial Buildings Allowance.

INDEPENDENT REVIEW REPORT TO TRINITY MIRROR 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 2009 which comprises the condensed consolidated income statement, the condensed consolidated statement of recognised income and expense, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 15. 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 for use in the United Kingdom. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

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

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards 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 Group 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 ended 28 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditors
London, United Kingdom

30 July 2009

 

END

 

 

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