Half-yearly Report

RNS Number : 7907F

Trinity Mirror PLC

01 August 2016

Trinity Mirror plc

1 August 2016

Half-Yearly Financial Report

For the 27 weeks ended 3 July 2016

Key Highlights

· Strong growth in adjusted ⁽¹⁾ operating profit, profit before tax and earnings per share

Strong growth in adjusted operating profit of 44.3%, adjusted profit before tax of 42.3% and adjusted earnings per share of 24.8% driven by the benefits of the acquisition of Local World and tight management of the cost base. Group revenue increased by 29.9% to £374.7 million with like for like ⁽²⁾ revenue falling by 7.8%.

· Continued growth in digital audience and revenue

Continued growth in digital audience with average monthly page views on a like for like basis ⁽³⁾ growing by 19% to 770 million. Like for like publishing digital revenue grew by 14.4% to £39.7 million with digital display and transactional revenue growing by 27.8% while digital classified revenue fell by 9.0%.

· Local World integration progressing well

We are pleased with the progress we are making with bringing Local World into our business and remain on track to deliver at least £12 million of annualised synergy savings by 2017.

· Strong cash generation

Strong net cash inflows resulted in net debt ⁽⁴⁾ falling by £44.9 million from £92.9 million to £48.0 million. The Group held cash balances of £85.3 million at the period end.

· Interim dividend of 2.1 pence per share and a £10 million share buyback programme

The interim dividend has been increased by 5% from 2.0 pence to 2.1 pence per share. The Group has today announced a share buyback programme of up to £10 million reflecting the Board's continued confidence in the cash flow generated by the Group and commitment to generating returns to shareholders.

· Pension deficit

The IAS19 pension deficit increased by £120.8 million to £426.0 million (£349.5 million net of deferred tax) driven by a fall in long term interest rates. Alongside the share buyback, the Board has agreed to contribute a minimum of £5 million or up to a maximum of 75% of the share buyback as additional funding to the defined benefit pension schemes.

· Outlook

Our strategic focus remains to grow digital audience and revenue whilst protecting print revenue and profit. Despite the challenging print environment and increased macroeconomic uncertainty arising from the outcome of the UK's referendum on EU membership, the Board remains confident that its strategy will enable continued progress and help support the Group's profit and cash flow.

Results	Adjusted results ⁽¹⁾		Statutory results
	2016	2015	2016	2015
	£m	£m	£m	£m
Revenue	374.7	288.5	374.7	288.5
Operating profit	69.1	47.9	53.6	19.6
Profit before tax	66.9	47.0	45.2	12.1
Earnings per share	19.1p	15.3p	12.8p	4.0p
Dividends per share	-	-	2.1p	2.0p

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

(2) Like for like assumes Local World was owned from the beginning of 2015 and excludes revenue from the Independent print and distribution contract which ceased in April 2016 and compares the 27 weeks to 3 July 2016 with the 27 weeks to 5 July 2015. 2016 will be a 53 week period and the additional week of trading is included in the first half of the year.

(3) Like for like average monthly page views excluding galleries for the Publishing division across web, mobile and apps assumes Local World was owned from the beginning of 2015 and compares the period for January to June 2016 with January to June 2015.

(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 2016, Simon Fox, Chief Executive, Trinity Mirror plc, said:

"I am pleased we delivered another strong performance despite the challenging print environment. We are already seeing the benefits from our acquisition of Local World last year and continue to tightly manage the cost base across the Group. Our strategic focus remains to grow digital audience and revenue whilst protecting print revenue and profit. We are confident that our strategy and our strong balance sheet position will enable continued progress despite increased uncertainty around the economic environment."

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

Will Medvei, Director 020 7404 5959

Investor presentation

A presentation for analysts will be held at 9.00am on Monday 1 August 2016. The presentation will be live on our website: www.trinitymirror.com at 9.00am 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 non-recurring items, restructuring charges in respect of cost reduction measures and accounting items such as the amortisation of intangible assets, the pension administrative expenses, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments, the pension finance charge and the impact of tax legislation changes. Set out in note 16 is the reconciliation between the statutory results and the adjusted results.

Like for like revenue trend

Like for like assumes Local World was owned from the beginning of 2015 and excludes revenue from the Independent print and distribution contract which ceased in April 2016 and compares the 27 weeks to 3 July 2016 with the 27 weeks to 5 July 2015. 2016 will be a 53 week period and the additional week of trading is included in the first half of the year.

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 delivered a strong performance in the first half. In challenging print markets the Group remained focused on supporting print revenue and profit through tightly managing the cost base whilst continuing to build digital audience and revenue.

Group revenue increased by 29.9% to £374.7 million. The increase in revenue includes the benefit of the acquisition of Local World in November 2015 and an additional week of trading in the period, partly offset by the cessation of the Independent print and distribution contract in April 2016 after the titles were closed.

On a like for like basis revenue fell by 7.8% with publishing digital revenue growing by 14.4% and publishing print revenue falling by 10.3%. Increased challenges in print advertising markets saw declines in display advertising across a number of sectors, in particular retail. Most classified advertising categories also came under pressure, in particular recruitment. We were encouraged by the performance during the European Football Championship which saw increased spend from gaming and betting. Circulation revenues declined 4.7% with volume declines partially mitigated by cover price increases. Strong digital growth from display and transactional revenue of 27.8% driven by an increase in audience was partly offset by classified revenue declines of 9.0%, primarily due to falls in recruitment advertising. The growth in digital revenue was driven by the growth in digital audience with average monthly page views on a like for like basis growing by 19% to 770 million.

Good cost control, together with the acquisition of Local World and an additional week of trading contributed to adjusted operating profit growing by 44.3%, adjusted profit before tax growing by 42.3% and adjusted earnings per share growing by 24.8%. The Group delivered structural (including synergy) cost savings of £9 million in the first half and expects to deliver at least £15 million in the full year. The increase in adjusted earnings per share was driven by the higher adjusted operating profit partially offset by higher interest costs and increased shares in issue related to the acquisition of Local World.

Statutory operating profit increased by £34.0 million to £53.6 million reflecting the benefit of the increased adjusted operating profit and from reduced non-recurring operating charges of £4.0 million compared to £17.4 million in 2015. The non-recurring items comprise a £2.0 million charge for terminating a contract to sell certain assets to the Iliffe family following the acquisition of Local World and a £2.0 million non-cash impairment charge against the carrying value of goodwill in our Specialist Digital division. Statutory profit before tax increased by £33.1 million to £45.2 million with statutory earnings per share increasing by 8.8 pence to 12.8 pence.

Resilient Balance Sheet

The cash flows of the Group have enabled a continued fall in leverage since the acquisition of Local World and provide resilience and financial flexibility in a volatile trading environment with increased uncertainty created by the UK referendum on EU membership.

Net debt on a contracted basis fell by £44.9 million from £92.9 million to £48.0 million. Net debt comprises contracted gross debt of £133.3 million and cash balances of £85.3 million. Contracted gross debt consists of the outstanding private placement loan notes totalling £68.3 million which are due for repayment in June 2017 and £65.0 million of the original £80.0 million amortising term loan entered into in connection with the acquisition of Local World. The cash flow generated by the Group enabled the early payment in May 2016 of the £15.0 million instalment on the £80.0 million term loan originally due in November 2016.

The deficit on the defined benefit pension schemes increased by £120.8 million to £426.0 million (£349.5 million net of deferred tax) driven by a fall in long term interest rates. In accordance with the agreed funding plans following the 31 December 2013 valuations, the Group made contributions of £17.9 million to fund pension scheme deficits in the period and total payments of £35.7 million are due for 2016. Whilst the pension scheme deficit had increased during the period, this has no immediate impact on the agreed funding with the next valuation date for funding purposes being 31 December 2016 and with changes to the recovery plans required to be agreed by March 2018. The Group will have initial indications of the impact on the future funding during 2017.

Dividends and Share Buyback

The final dividend for 2015 of 3.15 pence per share was paid in June 2016. The Board has approved an interim dividend for 2016 of 2.1 pence per share, representing an increase of 5%. This will be paid on 25 November 2016 to shareholders on the register on 4 November 2016. 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.

In addition to the interim dividend, the Board has approved a share buyback programme of up to £10 million which will commence during August 2016. The share buyback programme will make efficient use of the surplus cash in the Group and will enhance earnings per share. It confirms the Board's confidence in the cash flow generated by the Group and its commitment to generating returns to shareholders. Alongside the share buyback, the Board has agreed to contribute a minimum of £5 million or up to a maximum of 75% of the share buyback as additional funding to the defined benefit pension schemes. Further information on the share buyback programme is set out in the announcement entitled "Trinity Mirror plc Share Repurchase Programme" released today.

Historical Legal Issues

A provision of £41.0 million has previously been made in relation to dealing with and resolving civil claims in relation to phone hacking and at the prior year end £36.3 million remained unutilised. During the period, £5.3 million has been utilised to settle civil claims with £31.0 million remaining. Although there remains uncertainty as to how these matters will progress, the Board remains confident that the exposures arising from these historic events are manageable and do not undermine the delivery of the Group's strategy.

Outlook

The trading environment was volatile in the first half and this is expected to continue through the remainder of the year, in particular, driven by the macroeconomic uncertainty created by the outcome of the UK's referendum on EU membership. In July, Group revenue fell by 9% on a like for like basis.

People

Steve Hatch and Olivia Streatfeild have joined the Board as non executive directors. Steve is Regional Director of Facebook UK and Ireland and has previously held senior positions in advertising agencies and therefore brings significant relevant experience. Olivia has held an executive role at Talk Talk and was previously an Associate Principle at McKinsey & Co and the combination of her consultancy and executive experience provides valuable insight and support to the Board.

The Group announced the appointment of Eirik Svendsen in the newly created role of Group Chief Technology Officer reporting to the Chief Executive. Eirik had previously been an executive at Schibsted Media Group, an international media group, since 2011. His career history to date has included internet-centric companies across Europe, with roles at world-leading broadcasting software company Vizrt and publishing software company Escenic, amongst others. In his new role, Eirik will lead the Product, Engineering and Systems and Infrastructure teams. Eirik will have overall responsibility for all technology and product management strategy and implementation across the Group including innovation of the customer experience and architectures.

We would like to thank all our colleagues for their contribution to the half year performance.

Strategic Update

We remain focused on delivering our vision of being "a dynamic and growing media business that is an essential part of our customers' daily lives". Our strategic objective remains to deliver sustainable growth in revenue and profit through three key areas of strategic focus:

· Protecting revenue and profit for our core brands in print;

· Growing our existing brands onto digital delivery channels; 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 revenue and profit for our core brands in print

We have continued to enhance and rationalise our print portfolio to protect revenue and profit for our core brands in print:

· In a challenging print market the Group delivered a revenue performance which is broadly in line with market trends;

· Continued with the roll out of the new design for our regional newspapers with less focus on crime, more reporting on things to do in the city and improved coverage in areas such as football and entertainment. In the first half we have re-launched The Chronicle in Newcastle, the Manchester Evening News and the South Wales Echo. This follows the re-launch of the Liverpool Echo and the Birmingham Mail in the second half of 2015;

· Enhanced the format and design of the Sunday People magazine which presents a more appealing proposition to readers and advertisers at reduced cost as it is now printed internally;

· Committed to building a loyal reader subscription base for our regional dailies with an ambition to develop brand loyalty subscriptions. The regional 'Plus' loyalty programme has been rolled out to 12 of our 26 dailies with plans to complete the full roll out in 2017. Result so far show high levels of reader engagement and improved order retentions;

Strategic Update continued

Protecting revenue and profit for our core brands in print continued

· Continued to review our portfolio and have closed five small titles and one title went from daily to weekly;

· Our portfolio of national and regional titles have been recognised for many industry awards. The Daily Mirror's Nicola Methven won Showbiz Journalist of the Year at the prestigious Press Awards in March. Mirror Money picked up two awards at the Headlinemoney awards in May. Trinity Mirror's journalists, newspapers and websites won 11 awards at the Regional Press Awards in May, the most of any publisher; and

· Continued focus on costs has ensured that, excluding the impact of the Local World acquisition, operating costs fell. The Group delivered structural (including synergy) cost savings of £9 million in the first half and expect to deliver at least £15 million in the full year. We are on track to deliver at least £12 million of annualised synergy savings from the Local World acquisition by 2017.

Growing our existing brands onto digital delivery channels

· Strong growth in digital audience and revenue. Average monthly page views on a like for like basis grew by 19% to 770 million driving strong growth in digital display and transactional revenue of 27.8%;

· Continued investment in product development with continued focus on mobile and video and a new fully responsive site, developed in house, which is currently being trialled with a planned roll out across the portfolio over the course of the next 12 months. This will improve the user experience across all platforms and also present new and improved ad formats and viewability to improve response for our advertisers;

· We are ensuring that our content is accessible on distributed platforms including Apple News, Facebook Instant Articles and Google's Accelerated Mobile Pages;

· Partnered with discovery platform Taboola to boost native advertising inventory and audience insight. The collaboration enhances our in-house native advertising efforts, enabling sales teams to promote both on-site and off-site sponsored content campaigns. Taboola's personalised content recommendations appear in articles across our network of desktop and mobile sites, including the Daily Mirror, the Daily Record and the Manchester Evening News, driving audience engagement and revenue;

· In June, Mirror Online celebrated a digital traffic record with 82 million unique browsers, a year-on-year increase of 25%;

· Regionally, our websites continued to enjoy strong growth under the 'Connected Newsroom' strategy. The Manchester Evening News, Liverpool Echo and Wales Online were the top three most visited regional sites in March, with 11.2 million, 6.7 million and 6.6 million unique browsers, respectively; and

· Trinity Mirror won three awards at the Online Media Awards in June 2016. Mirror Online scooped the awards for the Online Editorial Campaign of the Year and for the Best Use of Social Media. The Liverpool Echo picked up the award for Best Local/Regional News Site.

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

· After the successful launch of Belfast Live last year, which achieved a monthly audience of more than one million unique browsers within five months, we have now launched Glasgow Live and Dublin Live. Three months after launch, the two sites each achieved page views of over one million. The new sites provide a rich supply of rolling local news, weather, traffic, local event listings and lifestyle, presenting an attractive targeted proposition for advertisers;

· We launched a new mobile app, Perspecs, which presents three sides to a news story, allowing users to switch between different news sources presenting opposing views. For example the neutral, left and right wing political perspective of the same story, or a home, away and neutral report on a football match. This new innovative app has obtained funding for further development from the Google Digital News Initiative Fund; and

· During the period we launched a new national newspaper, The New Day. Although the title received many supportive reviews and built a strong following on Facebook, the circulation for the title was below our expectations. As a result, we decided to close the title on 6 May 2016. Whilst disappointing, the launch and subsequent closure have provided new insights into enhancing our newspapers and a number of these opportunities will be considered over time.

Strategic Update continued

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

· Following the acquisition of Local World in November 2015, excellent progress has been made on sharing best practices across the Group with a number of non system dependent changes having already been implemented. In addition to the relocating of all central operations previously located at Local World's head office to the Group's operations at Canary Wharf, we have:

o Rationalised regional management structures including the creation of a number of super regions in the South, Midlands and South Wales;

o Rolled out best practice operational structures across the functions of advertising, editorial and newspaper sales;

o Centralised recruitment advertising in Bristol and are in the process of centralising private advertising in Hull; and

o Combined the national advertising sales across print and digital throughout the entire Group under the umbrella of TM Solutions.

Good progress is being made on the planning for the roll out of our publishing and finance systems across Local World with an aim to complete implementation by 2018. The roll out of the digital platform is being prioritised given the significant opportunities to grow audience, revenue and profit in a growing digital advertising sector.

We continue to believe that consolidation of newspaper assets presents opportunities for enhancing earnings and shareholder value.

We are pleased with the progress we continue to make with our strategic initiatives against a back drop of a challenging print market and increased uncertainty created by the outcome of the UK's referendum on EU membership.

Group Review

Income statement	Statutory results		Adjusted results
	2016	2015	2016	2015
	£m	£m	£m	£m
Revenue
Publishing	345.5	254.6	345.5	254.6
Print	305.8	235.7	305.8	235.7
Digital	39.7	18.9	39.7	18.9
Printing	19.5	24.2	19.5	24.2
Specialist Digital	7.7	7.8	7.7	7.8
Central	2.0	1.9	2.0	1.9
Revenue	374.7	288.5	374.7	288.5
Costs	(321.3)	(270.9)	(306.0)	(244.1)
Associates	0.2	2.0	0.4	3.5
Operating profit	53.6	19.6	69.1	47.9
Financing	(8.4)	(7.5)	(2.2)	(0.9)
Profit before tax	45.2	12.1	66.9	47.0
Tax	(9.2)	(2.2)	(13.5)	(9.0)
Profit after tax	36.0	9.9	53.4	38.0
Earnings per share	12.8p	4.0p	19.1p	15.3p

The results have been prepared for the 27 weeks ended 3 July 2016 (2016) and the comparative period has been prepared for the 26 weeks ended 28 June 2015 (2015). 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 increased by £86.2 million or 29.9% to £374.7 million. The increase in revenue includes the benefit of the acquisition of Local World in November 2015 and an additional week of trading in the period, partly offset by the cessation of the Independent print and distribution contract in April 2016 after the titles were closed. Further details on the revenue trends for each division are shown in the Divisional Review.

	Statutory results		Adjusted results
	2016	2015	2016	2015
	£m	£m	£m	£m
Labour	(125.7)	(96.6)	(125.7)	(96.6)
Newsprint	(35.6)	(33.2)	(35.6)	(33.2)
Depreciation	(11.3)	(11.7)	(11.3)	(11.7)
Other	(148.7)	(129.4)	(133.4)	(102.6)
Non-recurring items	(4.0)	(17.4)	-	-
Amortisation of intangible assets	(0.2)	(1.1)	-	-
Pension administrative expenses	(1.0)	(1.0)	-	-
Restructuring charges in respect of cost reduction measures	(10.1)	(7.3)	-	-
Other	(133.4)	(102.6)	(133.4)	(102.6)
Costs	(321.3)	(270.9)	(306.0)	(244.1)

Statutory costs increased by £50.4 million or 18.6% to £321.3 million reflecting the purchase of Local World and the additional week in the first half of 2016. Adjusted operating costs increased by £61.9 million or 25.4% to £306.0. The reduced level of increase in statutory costs reflects the impact of the provision for dealing with and resolving civil claims of £16.0 million in the prior year with there being no such provision in this period.

The Group has a 21.53% investment in PA Group and up to 13 November 2015, prior to acquiring the entire business, held a 19.98% investment in Local World, accounted for as associated undertakings.

	Statutory results		Adjusted results
	2016	2015	2016	2015
	£m	£m	£m	£m
Result before amortisation and non-recurring items	0.4	3.5	0.4	3.5
Amortisation of intangible assets	(0.1)	(1.4)	-	-
Non-recurring items	(0.1)	(0.1)	-	-
Share of results of associates	0.2	2.0	0.4	3.5

Group Review continued

The statutory and adjusted result for associates fell by £1.8 million and £3.1 million respectively. The decline is wholly attributable to Local World which was an associated undertaking in the first half of 2015 and is now a wholly owned subsidiary.

The statutory operating profit increased by £34.0 million to £53.6 million. Adjusted operating profit increased by £21.2 million or 44.3% to £69.1 million with operating margin pre associates increasing by 2.9 percentage points from 15.4% to 18.3%.

	Statutory results		Adjusted results
	2016	2015	2016	2015
	£m	£m	£m	£m
Investment revenues	0.3	0.3	0.3	0.3
Pension finance charge	(5.2)	(5.5)	-	-
Finance costs	(3.5)	(2.3)	(2.5)	(1.2)
Interest on bank overdrafts and borrowings	(2.5)	(1.2)	(2.5)	(1.2)
Fair value gain/(loss) on derivative financial instruments	7.3	(2.0)	-	-
Foreign exchange (loss)/gain on retranslation of borrowings	(8.3)	0.9	-	-
Financing	(8.4)	(7.5)	(2.2)	(0.9)

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 increased by £0.9 million to £8.4 million. Adjusted financing costs increased by £1.3 million to £2.2 million reflecting the interest on the £80 million term loan procured to partially fund the acquisition of Local World in November 2015.

The statutory tax charge of £9.2 million (2015: £2.2 million) comprises a current tax charge of £9.0 million (2015: £2.6 million) and a deferred tax charge of £0.2 million (2015: credit £0.4 million). The statutory effective tax rate is higher than the standard rate of corporation tax for the reasons set out in the reconciliation:

Reconciliation of tax charge	2016 %	2015 %
Standard rate of corporation tax	(20.0)	(20.3)
Items not deductible in determining taxable profit (non qualifying depreciation/transaction costs)	(1.3)	(2.0)
Tax effect of items that are not taxable in determining taxable profit (utilised tax losses)	0.4	-
Prior period adjustment (current and deferred tax)	0.4	0.8
Tax effect of share of results of associates (brought in post tax)	0.1	3.3
Tax charge rate	(20.4)	(18.2)

The adjusted tax charge of £13.5 million (2015: £9.0 million) represents 20.2% (2015: 19.1%) of adjusted profit before tax. The rate is less than the statutory effective rate as the impact of the charges that are not deductible for tax is higher on the statutory operating profit compared to the impact on the adjusted operating profit.

	Statutory results		Adjusted results
	2016	2015	2016	2015
	£m	£m	£m	£m
Profit after tax	36.0	9.9	53.4	38.0
Weighted average number of shares (000's)	280,172	249,109	280,172	249,109
Earnings per share	12.8p	4.0p	19.1p	15.3p

Statutory earnings per share increased by 8.8 pence to 12.8 pence. Adjusted earnings per share increased by 3.8 pence or 24.8% to 19.1 pence. Statutory and adjusted earnings per share have benefited from the additional profit generated by the Group following the purchase of Local World and the additional week of trading in the period.

The increase in the weighted average number of shares year on year primarily reflects the impact of the 8.7% equity placing on 28 October 2015 and the issue of shares representing 1.3% of equity on 13 November 2015, both relating to the acquisition of Local World.

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 digital classified recruitment 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. After completing the acquisition of the 80.02% of Local World not previously owned on 13 November 2015, Local World is included in the Publishing division. Prior to 13 November 2015 the Group's 19.98% interest in Local World was equity accounted for as an associated undertaking and included in the Central division.

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

	2016	2015	Variance	Variance
	£m	£m	£m	%
Publishing	345.5	254.6	90.9	35.7%
Printing	19.5	24.2	(4.7)	(19.4%)
Specialist Digital	7.7	7.8	(0.1)	(1.3%)
Central	2.0	1.9	0.1	5.3%
Revenue	374.7	288.5	86.2	29.9%
Publishing	74.1	49.5	24.6	49.7%
Printing	-	-	-	-
Specialist Digital	1.2	1.3	(0.1)	(7.7%)
Central	(6.2)	(2.9)	(3.3)	(113.8%)
Adjusted operating profit	69.1	47.9	21.2	44.3%

The year on year revenue trends are distorted by the acquisition of Local World on 13 November 2015, by the additional week of trading in 2016 and from the ending of the Independent print and distribution contract in April 2016. Like for like assumes Local World was owned from the beginning of 2015 and excludes revenue from the Independent print and distribution contract and compares the 27 weeks to 3 July 2016 with the 27 weeks to 5 July 2015. 2016 will be a 53 week period and the additional week of trading is included in the first half of the year.

Publishing

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

	2016	2015	Variance	Variance
	£m	£m	£m	%
Print	305.8	235.7	70.1	29.7%
Circulation	161.7	134.3	27.4	20.4%
Advertising	127.2	87.7	39.5	45.0%
Other	16.9	13.7	3.2	23.4%
Digital	39.7	18.9	20.8	110.1%
Display and transactional	28.1	13.8	14.3	103.6%
Classified	11.6	5.1	6.5	127.5%
Revenue	345.5	254.6	90.9	35.7%
Costs	(271.4)	(205.1)	(66.3)	(32.3%)
Adjusted operating profit	74.1	49.5	24.6	49.7%
Adjusted operating margin	21.4%	19.4%	2.0%	10.3%

Divisional Review continued

Publishing continued

Revenue increased by 35.7% or £90.9 million to £345.5 million with print revenue improving by 29.7% and digital revenue growing by 110.1%. On a like for like basis revenue fell by 8.0% with print revenue declining by 10.3% and digital revenue growing by 14.4%.

Costs increased by £66.3 million or 32.3% to £271.4 million.

The £90.9 million increase in revenue coupled with tight management of costs enabled operating profit to increase by £24.6 million or 49.7% to £74.1 million with operating margin increasing by 2.0 percentage points from 19.4% to 21.4%.

Print revenue

Print revenue grew by 29.7% reflecting the inclusion of Local World and the additional week of trading in 2016.

Circulation revenue improved by 20.4%. On a like for like circulation revenues fell by 4.7% with volume declines partially mitigated by cover price increases.

The Daily Mirror underperformed the UK national daily tabloid market for the first half with a volume decline of 11.1% compared to a 4.8% decline for the market. The Sunday Mirror and Sunday People declined by 14.6% and 15.4% respectively in a UK national Sunday tabloid market that declined by 5.7%. The Daily Record was down 12.2% against an overall Scottish daily tabloid market decline of 7.5% and the Sunday Mail was down 14.0% against an overall Scottish Sunday tabloid market decline of 9.8%. The market trends have been distorted by cover price cuts and increased sampling in the market. This is against cover price increases for our titles and consistent sampling volumes.

The market for our regional titles remains difficult with declines of 14.6% for paid for dailies, 16.3% for paid for weeklies and 17.6% for paid for Sundays. All titles are experiencing difficulty and our overall trends remain challenged in the market.

Print advertising increased by 45.0% with display and other up by 11.2% and classified up by 103.4%. Like for like advertising fell by 17.2% with display and other lower by 13.6% and classified lower by 20.5%. Increased challenges in print advertising markets saw declines in display advertising across a number of sectors, in particular retail. Most classified advertising categories also came under pressure, in particular recruitment. We were encouraged by the strong performance during the European Football Championship which saw increased spend from gaming and betting.

The Daily Mirror print advertising volume market share in the UK national daily tabloid market was broadly in line with 2015 at 17.8% (2015: 18.1%). The Sunday Mirror and Sunday People share fell with the Sunday Mirror share falling from 17.7% to 17.3% and the Sunday People share falling from 12.6% to 10.8%. The Daily Record share improved from 15.7% to 16.0% and the Sunday Mail share improved from 27.3% to 33.2%. Our regional titles continue to experience difficult advertising markets, particularly national advertising in our metropolitan titles.

Other print revenue increased by 23.4%. Like for like other revenues fell marginally by £0.6 million or 3.4%.

Digital revenue

Digital revenue grew by 110.1% reflecting the inclusion of Local World and the additional week of trading in 2016. Display and transactional revenue grew by 103.6% and classified revenue grew by 127.5%.

Like for like digital revenue grew by 14.4% with strong digital growth from display and transactional revenue of 27.8% driven by an increase in audience partly offset by classified revenue declines of 9.0%, primarily due to recruitment. Strong growth in digital audience, with average monthly page views on a like for like basis growing by 19% to 770 million, supports the growth in display and transactional revenue.

Printing

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

	2016	2015	Variance	Variance
	£m	£m	£m	%
Contract printing	13.7	17.5	(3.8)	(21.7%)
Newsprint supply	4.7	5.6	(0.9)	(16.1%)
Other revenue	1.1	1.1	-	0.0%
Revenue	19.5	24.2	(4.7)	(19.4%)
External costs	(76.6)	(79.2)	2.6	3.3%
Publishing division recharge	57.1	55.0	2.1	3.8%
Adjusted operating result	-	-	-	-

Divisional Review continued

Printing continued

Revenue fell by £4.7 million or 19.4% to £19.5 million. The fall in revenue reflects the impact of the cessation of the contract print to the Independent and the acquisition of Local World on 13 November 2015 which resulted in contract print revenue from Local World post acquisition being accounted for as internal revenue. The acquisition of Local World resulted in revenue of £2.8 million now being accounted for as internal printing revenue and the impact from the Independent was £1.1 million.

On a like for like basis revenue fell by 8.5% reflecting the impact of lower volumes and lower newsprint prices.

External costs fell by £2.6 million or 3.3% to £76.6 million due to cost reduction initiatives, a fall in newsprint prices and reduction in costs associated with falling contract print revenue. The net cost recharged to the Publishing division was £57.1 million compared to £55.0 million in the prior year. Although the Publishing division recharge increased year on year, this now includes costs of printing certain Local World titles which were previously included in external revenue. Excluding recharges in relation to Local world titles, recharges to the Publishing division fell due to cost reductions, lower volumes and the benefit of lower newsprint prices.

Specialist Digital

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

	2016	2015	Variance	Variance
	£m	£m	£m	%
Advertising	2.5	2.5	-	0.0%
Other	5.2	5.3	(0.1)	(1.9%)
Revenue	7.7	7.8	(0.1)	(1.3%)
Costs	(6.5)	(6.5)	-	0.0%
Adjusted operating profit	1.2	1.3	(0.1)	(7.7%)

The Specialist Digital division includes Trinity Mirror Digital Recruitment, our digital classified recruitment business and Rippleffect and Communicator, our digital marketing services businesses. Recruitment advertising revenues have remained in line with 2015 and our marketing services businesses showed revenue declines of £0.1 million. Operating profit fell marginally by £0.1 million.

Central

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

	2016	2015	Variance	Variance
	£m	£m	£m	%
Revenue	2.0	1.9	0.1	5.3%
Costs	(8.6)	(8.3)	(0.3)	(3.6%)
Associates	0.4	3.5	(3.1)	(88.6%)
Adjusted operating loss	(6.2)	(2.9)	(3.3)	(113.8%)

The Central division includes revenue and costs not allocated to the operational divisions and the share of results of associates.

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 increased by £0.3 million from £8.3 million to £8.6 million reflecting increased central costs following the acquisition of Local World.

The result for the period was a loss of £6.2 million compared to a loss of £2.9 million in the first half of 2015. Excluding the impact on associates income from the acquisition of Local World, the adjusted operating loss increased marginally by £0.2 million.

Other Items

Pensions

The Group operates defined contribution pension schemes 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 last actuarial funding valuations of the defined benefit pension schemes were as at 31 December 2013. The valuations were completed in December 2014 with deficit funding contributions agreed of circa £36 million per annum from 2015. In addition, the Group agreed additional contributions would be paid at 50% of the excess if dividends paid in 2015 were above 5 pence per share and if a greater than 10% annual increase thereafter. The next valuation date of the schemes is 31 December 2016 and valuations are expected to be finalised by March 2018.

In December 2014, the Group prepaid contributions for 2015 and 2016 of £16.5 million and £0.5 million respectively. Payments in 2015 were £20.0 million. Payments in the first half of 2016 were £17.9 million.

The accounting pension deficit increased during the first half by £120.8 million from £305.2 million (£250.2 million net of deferred tax) to £426.0 million (£349.5 million net of deferred tax). This increase in the deficit reflects the effect of the fall in the discount rate. The increase in the accounting pension deficit does not have an immediate impact on the agreed funding commitments.

In conjunction with the £10 million share buyback announced today, the Group has agreed additional funding of up to £7.5 million (including a minimum payment of £5 million), representing 75% of the share buyback.

Cash and borrowings

Cash balances of £85.3 million were held at the reporting date and the Group has no drawings on its £60.0 million revolving credit facility which is committed until July 2018. Contracted gross debt comprised the outstanding private placement loan notes totalling £68.3 million (assuming that the US$ denominated private placement loan notes and related cross-currency interest rate swap is not terminated prior to maturity) which are due for repayment in June 2017 and the £65.0 million remaining on the amortising term loan entered into to partially fund the acquisition of Local World. The first instalment of £15.0 million due on the £80 million amortising term loan in November 2016 was paid early in May 2016.

Contracted net debt was £48.0 million, a fall of £44.9 million from £92.9 million at the prior year end.

Statutory net debt (which includes the US$ denominated private placement loan notes at the reporting date exchange rate and the related cross-currency interest rate swap at fair value) decreased by £43.9 million from £88.7 million to £44.8 million. The fair value of the Group's cross-currency interest rate swap was an asset of £10.8 million and the Sterling equivalent of the US$ denominated private placement loan notes was £75.9 million.

Related party transactions

There were no material non trading transactions during the period.

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 14 to 16 in the Trinity Mirror plc 2015 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.

The outcome of the recent UK referendum on EU membership has created increased macroeconomic uncertainty and the implications of this for our business. Considerations in relation to this uncertainty are included in the principal risks above. Whilst the impact is uncertain and hard to assess, based on current UK growth forecasts there is a risk that our revenues could be lower than expectations. In addition, there are other related factors which affect the Group, for example, the impact of a tougher UK business environment on interest rates and therefore long-term bond yields and the deficit in the Group's defined benefit pension schemes.

Other Items continued

Assessment of the Group's prospects

The directors have assessed the Group's prospects, both as a going concern and its longer term viability.

Going concern statement

The directors consider it appropriate to adopt the going concern basis of accounting in the preparation of the Group's half-yearly financial report.

In accordance with LR 9.8.6(3) of the Listing Rules, and in determining whether the Group's interim condensed consolidated financial statements 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 principal risks and uncertainties relating to its 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's financing facilities for the foreseeable future.

The directors have reasonable expectations 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 interim condensed consolidated financial statements.

Viability statement

The directors have a reasonable expectation that the Company and the Group will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

The directors assessed the prospects of the Group over a three year period which reflects the budget and planning cycle adopted by the Group. The assessment takes into account the Group's current position and the principal risks and uncertainties facing the Group including those that would threaten the business model, future performance, solvency or liquidity.

Sensitivity analysis is applied to the projections to model the potential effects should principal risks and uncertainties actually occur, individually or in combination. The Board also assessed the likely effectiveness of any proposed mitigating actions.

It is understood that such future assessments are subject to a level of uncertainty that increases with time and, therefore, future outcomes cannot be guaranteed or predicted with certainty. Also, this assessment was made recognising the principal risks and uncertainties that could have an impact on the future performance of the Group and also the financial risks described in the notes to the Group's interim condensed consolidated financial statements.

Further information concerning the review of going concern and viability are set out in the Trinity Mirror plc 2015 Annual Report.

Board changes

Steve Hatch joined the Board on 1 December 2015 and Olivia Streatfeild joined the Board on 15 January 2016.

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 Group's interim condensed consolidated financial statements, prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the Company and the undertakings included in the consolidation taken as a whole; and

b) the Management Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

By order of the Board of directors

Simon Fox Vijay Vaghela

Chief Executive Group Finance Director

1 August 2016

Consolidated income statement

for the 27 weeks ended 3 July 2016 (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015)

	notes	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Revenue	3,4	374.7	288.5	592.7
Cost of sales		(180.9)	(149.9)	(300.3)
Gross profit		193.8	138.6	292.4
Distribution costs		(41.4)	(33.3)	(67.2)
Administrative expenses:
Non-recurring items	5	(4.0)	(17.4)	(4.4)
Restructuring charges in respect of cost reduction measures		(10.1)	(7.3)	(15.3)
Amortisation of intangible assets		(0.2)	(1.1)	(1.8)
Pension administrative expenses	13	(1.0)	(1.0)	(2.1)
Other administrative expenses		(83.7)	(60.9)	(121.6)
Share of results of associates:
Results before non-recurring items and amortisation		0.4	3.5	6.0
Non-recurring items	5	(0.1)	(0.1)	(1.3)
Amortisation of intangible assets		(0.1)	(1.4)	(2.5)
Operating profit	3	53.6	19.6	82.2
Investment revenues	6	0.3	0.3	0.6
Pension finance charge	13	(5.2)	(5.5)	(10.9)
Finance costs	7	(3.5)	(2.3)	(4.7)
Profit before tax		45.2	12.1	67.2
Tax (charge)/credit	8	(9.2)	(2.2)	9.8
Profit for the period attributable to equity holders of the parent		36.0	9.9	77.0

Statutory earnings per share		2016 Pence	2015 Pence	2015 Pence
Earnings per share - basic	10	12.8	4.0	30.2
Earnings per share - diluted	10	12.8	3.9	29.6

Adjusted* earnings per share		2016 Pence	2015 Pence	2015 Pence
Earnings per share - basic	10	19.1	15.3	33.9
Earnings per share - diluted	10	19.1	14.9	33.2

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

Consolidated statement of comprehensive income

for the 27 weeks ended 3 July 2016 (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015)

	notes	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Profit for the period		36.0	9.9	77.0

Items that will not be reclassified to profit and loss:
Actuarial (losses)/gains on defined benefit pension schemes	13	(132.5)	7.0	(11.0)
Tax on actuarial (losses)/gains on defined benefit pension schemes	8	23.8	(1.4)	2.2
Deferred tax charge resulting from the future change in tax rate	8	-	-	(6.0)
Share of items recognised by associates		1.1	(3.2)	(3.2)
Other comprehensive (costs)/income for the period		(107.6)	2.4	(18.0)

Total comprehensive (costs)/income for the period		(71.6)	12.3	59.0

Consolidated cash flow statement

for the 27 weeks ended 3 July 2016 (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015)

	notes	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m
Cash flow from operating activities
Cash generated from operations	11	66.8	42.0	62.6
Income tax paid		(5.7)	(4.6)	(9.7)
Net cash inflow from operating activities		61.1	37.4	52.9
Investing activities
Interest received		0.3	0.3	0.6
Dividends received from associates		-	16.3	16.3
Purchases of property, plant and equipment		(2.5)	(2.1)	(3.6)
Acquisition of subsidiary undertaking		-	-	(148.2)
Net debt acquired on acquisition of subsidiary undertaking		-	-	(11.9)
Net cash (used in)/received from investing activities		(2.2)	14.5	(146.8)
Financing activities
Dividends paid		(8.8)	(7.5)	(12.5)
Interest paid on borrowings		(3.2)	(1.2)	(1.7)
Repayment of borrowings		(15.0)	-	-
Increase in borrowings		-	-	80.0
Issue of ordinary share capital		-		34.5
Purchase of shares for LTIP		(2.0)	-	-
Net cash (used in)/received from financing activities		(29.0)	(8.7)	100.3

Net increase in cash and cash equivalents		29.9	43.2	6.4

Cash and cash equivalents at the beginning of the period	12	55.4	49.0	49.0
Cash and cash equivalents at the end of the period	12	85.3	92.2	55.4

Consolidated statement of changes in equity

for the 27 weeks ended 3 July 2016 (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015)

	Share capital £m	Share premium account £m	Merger reserve £m	Capital redemption reserve £m	Retained earnings and other reserves £m	Total £m

At 27 December 2015 (audited)	(28.3)	(606.7)	(37.9)	(4.4)	(6.3)	(683.6)

Profit for the period	-	-	-	-	(36.0)	(36.0)
Other comprehensive costs for the period	-	-	-	-	107.6	107.6
Total comprehensive costs for the period	-	-	-	-	71.6	71.6

Credit to equity for equity-settled share-based payments	-	-	-	-	(0.5)	(0.5)
Purchase of shares for LTIP	-	-	-	-	2.0	2.0
Dividends paid	-	-	-	-	8.8	8.8
At 3 July 2016 (unaudited)	(28.3)	(606.7)	(37.9)	(4.4)	75.6	(601.7)

At 28 December 2014 (audited)	(25.8)	(606.7)	-	(4.4)	42.0	(594.9)
Profit for the period	-	-	-	-	(9.9)	(9.9)
Other comprehensive income for the period	-	-	-	-	(2.4)	(2.4)
Total comprehensive income for the period	-	-	-	-	(12.3)	(12.3)

Credit to equity for equity-settled share-based payments	-	-	-	-	(0.2)	(0.2)
Dividends paid	-	-	-	-	7.5	7.5
At 28 June 2015 (unaudited)	(25.8)	(606.7)	-	(4.4)	37.0	(599.9)

At 28 December 2014 (audited)	(25.8)	(606.7)	-	(4.4)	42.0	(594.9)
Profit for the period	-	-	-	-	(77.0)	(77.0)
Other comprehensive costs for the period	-	-	-	-	18.0	18.0
Total comprehensive income for the period	-	-	-	-	(59.0)	(59.0)

Issue of shares	(2.5)	-	(37.9)	-	-	(40.4)
Credit to equity for equity-settled share-based payments	-	-	-	-	(1.8)	(1.8)
Dividends paid	-	-	-	-	12.5	12.5
At 27 December 2015 (audited)	(28.3)	(606.7)	(37.9)	(4.4)	(6.3)	(683.6)

Consolidated balance sheet

at 3 July 2016 (28 June 2015 and 27 December 2015)

	notes	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m
Non-current assets
Goodwill		102.5	12.0	104.5
Other intangible assets		799.6	667.8	799.8
Property, plant and equipment		290.9	307.1	300.1
Investment in associates		20.5	23.9	19.2
Retirement benefit assets	13	9.5	17.6	29.4
Deferred tax assets		76.6	59.3	55.2
Derivative financial instruments	12	-	1.2	3.5
		1,299.6	1,088.9	1,311.7
Current assets
Inventories		6.1	5.7	6.2
Trade and other receivables		105.5	100.8	121.8
Derivative financial instruments	12	10.8	-	-
Cash and cash equivalents	12	85.3	92.2	55.4
		207.7	198.7	183.4
Total assets		1,507.3	1,287.6	1,495.1
Non-current liabilities
Borrowings	12	(59.0)	(64.4)	(132.6)
Retirement benefit obligations	13	(435.5)	(308.4)	(334.6)
Deferred tax liabilities		(176.0)	(177.1)	(175.9)
Provisions	14	(5.3)	(11.8)	(7.2)
		(675.8)	(561.7)	(650.3)
Current liabilities
Trade and other payables		(99.4)	(87.9)	(94.3)
Borrowings	12	(81.9)	-	(15.0)
Current tax liabilities	8	(9.4)	(9.3)	(8.4)
Provisions	14	(39.1)	(28.8)	(43.5)
		(229.8)	(126.0)	(161.2)
Total liabilities		(905.6)	(687.7)	(811.5)
Net assets		601.7	599.9	683.6

Equity
Share capital	15	(28.3)	(25.8)	(28.3)
Share premium account	15	(606.7)	(606.7)	(606.7)
Merger Reserve	15	(37.9)	-	(37.9)
Capital redemption reserve	15	(4.4)	(4.4)	(4.4)
Retained earnings and other reserves	15	75.6	37.0	(6.3)
Total equity attributable to equity holders of the parent		(601.7)	(599.9)	(683.6)

Notes to the consolidated financial statements

For the 27 weeks ended 3 July 2016 (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015)

1. General information

The financial information in respect of the 52 weeks ended 27 December 2015 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 financial information for the 27 weeks ended 3 July 2016 and 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 these periods 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 set of financial statements and their report is set out on page 30.

The half-yearly financial report was approved by the directors on 1 August 2016. This announcement 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.

2. Accounting policies

Basis of preparation

The Group's annual consolidated financial statements are prepared in accordance with IFRS as adopted by the European Union. The condensed 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

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

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

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

· IFRS 10 (Amended) 'Consolidated Financial Statements'

· IFRS 11 (Amended) 'Joint Arrangements'

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

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

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

· IAS 27 (Amended) 'Separate Financial Statements'

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

· IAS 38 (Amended) 'Intangible Assets'

Annual Improvements 2010-2012 cycle and 2011-2013 cycle have been implemented and had no material impact on the Group.

The following new and amended standards, which have not been applied and for which the impact on the Group is being assessed, were not yet endorsed by the European Union and/or have no effective date:

· IFRS 9 (Issued) 'Financial Instruments' - effective for periods beginning on or after 1 January 2018

· IFRS 10 (Amended) 'Consolidated Financial Statements'

· IFRS 15 (Issued) 'Revenue from Contracts with Customers' - effective for periods beginning on or after 1 January 2018

· IFRS 16 (Issued) 'Leases' - effective for periods beginning on or after 1 January 2019

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

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:

Provisions

There is uncertainty as to liabilities arising from the outcome or resolution of the ongoing historical legal issues. Provisions are measured at the best estimate of the expenditure required to settle the obligation based on the assessment of the related facts and circumstances at each reporting date.

2. Accounting policies (continued)

Key sources of estimation uncertainty (continued)

Retirement benefits

Actuarial assumptions adopted and external factors can significantly impact the surplus or deficit of defined benefit pension schemes. Valuations for funding and accounting purposes are based on assumptions about future economic and demographic variables. This results in risk of a volatile valuation deficit and the risk that the ultimate cost of paying benefits is higher than the current assessed liability value. Advice is sourced from independent and qualified actuaries in selecting suitable assumptions at each reporting date.

Critical judgements in applying the Group's accounting policies

In the process of applying the Group's accounting policies, described above, management has made the following judgements that have the most significant effect on the amounts recognised in the financial statements:

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. It also requires assessment of the appropriateness of the cash-generating unit at each reporting date. 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. Projections are based on both internal and external market information and reflect past experience. The discount rate reflects a long-term equity and debt mix based on the period end enterprise value assuming a long-term debt to EBITDA ratio of 2.5 times.

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 (Executive directors) 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 digital classified recruitment 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. After completing the acquisition of the 80.02% of Local World not previously owned on 13 November 2015, Local World is included in the Publishing division. Prior to 13 November 2015, the Group's 19.98% interest was equity accounted for as an associated undertaking and included in the Central division.

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

Segment revenue and results

27 weeks ended 3 July 2016 (unaudited)	Publishing 2016 £m	Printing 2016 £m	Specialist Digital 2016 £m	Central 2016 £m	Total 2016 £m
Revenue
Segment sales	345.5	76.6	8.0	2.0	432.1
Inter-segment sales	-	(57.1)	(0.3)	-	(57.4)
Total revenue	345.5	19.5	7.7	2.0	374.7
Segment result	74.1	-	1.2	(6.2)	69.1
Non-recurring items					(4.1)
Restructuring charges in respect of cost reduction measures					(10.1)
Amortisation of intangible assets					(0.3)
Pension administrative expenses					(1.0)
Operating profit					53.6
Investment revenues					0.3
Pension finance charge					(5.2)
Finance costs					(3.5)
Profit before tax					45.2
Tax charge					(9.2)
Profit for the period					36.0

3. Operating segments (continued)

Segment revenue and results (continued)

26 weeks ended 28 June 2015 (unaudited)	Publishing 2015 £m	Printing 2015 £m	Specialist Digital 2015 £m	Central 2015 £m	Total 2015 £m
Revenue
Segment sales	254.6	79.2	8.2	1.9	343.9
Inter-segment sales	-	(55.0)	(0.4)	-	(55.4)
Total revenue	254.6	24.2	7.8	1.9	288.5
Segment result	49.5	-	1.3	(2.9)	47.9
Non-recurring items					(17.5)
Restructuring charges in respect of cost reduction measures					(7.3)
Amortisation of intangible assets					(2.5)
Pension administrative expenses					(1.0)
Operating profit					19.6
Investment revenues					0.3
Pension finance charge					(5.5)
Finance costs					(2.3)
Profit before tax					12.1
Tax charge					(2.2)
Profit for the period					9.9

52 weeks ended 27 December 2015 (audited)	Publishing 2015 £m	Printing 2015 £m	Specialist Digital 2015 £m	Central 2015 £m	Total 2015 £m
Revenue
Segment sales	528.8	148.9	16.2	3.6	697.5
Inter-segment sales	-	(104.0)	(0.8)	-	(104.8)
Total revenue	528.8	44.9	15.4	3.6	592.7
Segment result	113.7	-	2.6	(6.7)	109.6
Non-recurring items					(5.7)
Restructuring charges in respect of cost reduction measures					(15.3)
Amortisation of intangible assets					(4.3)
Pension administrative expenses					(2.1)
Operating profit					82.2
Investment revenues					0.6
Pension finance charge					(10.9)
Finance costs					(4.7)
Profit before tax					67.2
Tax credit					9.8
Profit for the period					77.0

4. Revenue

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Publishing Print	305.8	235.7	485.9
Circulation	161.7	134.3	271.7
Advertising	127.2	87.7	182.0
Other	16.9	13.7	32.2
Publishing Digital	39.7	18.9	42.9
Display and transactional	28.1	13.8	30.6
Classified	11.6	5.1	12.3
Specialist Digital	7.7	7.8	15.4
Printing	19.5	24.2	44.9
Central	2.0	1.9	3.6
Total revenue	374.7	288.5	592.7

4. Revenue (continued)

The Group's operations are located primarily in the UK. The Group's revenue by location of customers is set out below:

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

UK and Republic of Ireland	373.5	287.1	589.6
Continental Europe	1.1	1.3	2.8
Rest of World	0.1	0.1	0.3
Total revenue	374.7	288.5	592.7

5. Non-recurring items

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Contract termination fee (a)	(2.0)	-	-
Impairment of goodwill (b)	(2.0)	-	-
Provision for historical legal issues (c)	-	(16.0)	(29.0)
Closure of print sites (d)	-	(1.4)	(3.4)
Local World acquisition transaction costs (e)	-	-	(5.6)
Gain on deemed disposal of Local World associate interest (f)	-	-	33.6
Non-recurring items included in administrative expenses	(4.0)	(17.4)	(4.4)
Non-recurring items included in share of results of associates (g)	(0.1)	(0.1)	(1.3)
Total non-recurring items	(4.1)	(17.5)	(5.7)

(a) In the first quarter of 2016, following extensive work on the separation of certain titles the Group had agreed to dispose to the Iliffe family as part of the acquisition of Local World, the Board concluded that it was in the best interests of the Company not to proceed with the disposal and therefore pay a break fee of £2.0 million to Iliffe Print Cambridge Limited.

(b) An impairment review comparing the carrying value of the Group's assets with the value in use was undertaken in accordance with IAS 36. The review indicated that a £2.0 million charge against the carrying value of goodwill in our Specialist Digital division was required.

(c) In the first half of 2015 a provision of £16.0 million and in the second half of 2015 a further £13.0 million was provided 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.

(d) Relates to the costs associated with the closure of the printing sites in Scotland (Blantyre) in June 2015 and Newcastle in December 2015 including the non-cash write off of fixed assets of £2.5 million.

(e) Transaction costs incurred by the Group relating to the acquisition of Local World on 13 November 2015.

(f) Gain on the accounting deemed disposal of the 19.98% interest in Local World on 13 November 2015.

(g) Group's share of restructuring costs incurred by PA Group (2015: Group's share of transaction related costs incurred by Local World and restructuring costs incurred by PA Group and Local World).

6. Investment revenues

27 weeks ended

3 July

2016 (unaudited)

£m

26 weeks ended

28 June

2015 (unaudited)

£m

52 weeks

ended

27 December

2015

(audited)

£m

Interest income on bank deposits and other interest receipts

0.3

0.6

7. Finance costs

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Interest on bank overdrafts and borrowings	(2.5)	(1.2)	(2.7)
Total interest expense	(2.5)	(1.2)	(2.7)
Fair value gain/(loss) on derivative financial instruments	7.3	(2.0)	0.3
Foreign exchange (loss)/gain on retranslation of borrowings	(8.3)	0.9	(2.3)
Finance costs	(3.5)	(2.3)	(4.7)

8. Tax

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m
Current tax
Corporation tax charge for the period	(9.0)	(3.0)	(9.8)
Prior period adjustment	-	0.4	0.9
Current tax charge	(9.0)	(2.6)	(8.9)
Deferred tax
Deferred tax (charge)/credit for the period	(0.6)	0.7	2.1
Prior period adjustment	0.4	(0.3)	(0.6)
Deferred tax rate change	-	-	17.2
Deferred tax (charge)/credit	(0.2)	0.4	18.7
Tax (charge)/credit	(9.2)	(2.2)	9.8

Reconciliation of tax (charge)/credit	%	%	%
Standard rate of corporation tax	(20.0)	(20.3)	(20.3)
Tax effect of items that are not deductible in determining taxable profit	(1.3)	(2.0)	(2.6)
Tax effect of items that are not taxable in determining taxable profit	0.4	-	10.9
Prior period adjustment	0.4	0.8	0.4
Deferred tax rate change	-	-	25.6
Tax effect of share of results of associates	0.1	3.3	0.6
Tax (charge)/credit	(20.4)	(18.2)	14.6

Included in the 'tax effect of items that are not taxable in determining taxable profit' is the impact of the utilisation of unrecognised losses of £1.7 million (gross) (2015: utilisation of unrecognised losses of £2.1 million (gross) and the impact of the non-taxable gain on the accounting deemed disposal of the 19.98% interest in Local World of £33.6 million). The standard rate of corporation tax for the period is 20% (2015: blended rate of 20.25% being a mix of 21% up to 31 March 2015 and 20% from 1 April 2015). The current tax liabilities amounted to £9.4 million (28 June 2015: £9.3 million and 27 December 2015: £8.4 million) at the reporting date.

The tax on actuarial (losses)/gains on defined benefit pension schemes taken to the consolidated statement of comprehensive income is a charge of £23.8 million comprising a deferred tax charge of £21.5 million and a current tax charge of £2.3 million (26 weeks ended 28 June 2015: charge of £1.4 million comprising deferred tax charge of £2.1 million and current tax credit of £0.7 million and 52 weeks ended 27 December 2015: credit of £2.2 million comprising a deferred tax credit of £0.8 million and a current tax credit of £1.4 million). The tax on share-based payments taken to equity is nil (26 weeks ended 28 June 2015: charge of £0.3 million comprising a deferred tax charge of £0.6 million and a current tax credit of £0.3 million and 52 weeks ended 27 December 2015: credit of £0.5 million comprising a deferred tax charge of £1.1 million and a current tax credit of £1.6 million).

9. Dividends

	27 weeks ended 3 July 2015 (unaudited) Pence	26 weeks ended 28 June 2015 (unaudited) Pence	52 weeks ended 27 December 2015 (audited) Pence
Dividends paid per share and recognised as distributions to equity holders in the period	3.15	3.00	5.00
Dividend proposed per share but not paid nor included in the accounting records	2.10	2.00	3.15

27 weeks ended

3 July

2015

(unaudited)

Pence

26 weeks

ended

28 June

2015

(unaudited)

Pence

52 weeks ended

27 December

2015

(audited)

Pence

Dividends paid per share and recognised as distributions to equity holders in the period

3.15

3.00

5.00

Dividend proposed per share but not paid nor included in the accounting records

2.10

2.00

3.15

The Board has approved an interim dividend for 2016 of 2.10 pence per share. On 5 May 2016 the final dividend proposed for 2015 of 3.15 pence per share was approved by shareholders at the Annual General Meeting and was paid on 10 June 2016. The total dividend payment amounted to £8.8 million. On 7 May 2015 the final dividend proposed for 2014 of 3.00 pence per share was approved by shareholders at the Annual General Meeting and was paid on 4 June 2015. An interim dividend for 2015 of 2.00 pence per share was paid on 30 November 2015. The total dividend payment in 2015 amounted to £12.5 million.

10. Earnings per share

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m		52 weeks ended 27 December 2015 (audited) £m

Profit after tax before adjusted* items	53.4	38.0		86.4
Adjusted* items:
Non-recurring items (after tax)	(3.2)	(13.9)		1.5
Amortisation of intangibles (after tax)	(0.3)	(2.3)		(3.9)
Finance costs (after tax)	(0.8)	(0.9)		(1.6)
Restructuring charges (after tax)	(8.1)	(5.8)		(12.2)
Pension charges (after tax)	(5.0)	(5.2)		(10.4)
Tax legislation changes (after tax)	-	-		17.2
Profit for the period	36.0	9.9		77.0
Weighted average number of ordinary shares	Thousand		Thousand		Thousand

Weighted average number of ordinary shares for basic earnings per share	280,172		249,109		254,936
Effect of potential dilutive ordinary shares in respect of share options	842		5,288		5,024
Weighted average number of ordinary shares for diluted earnings per share	281,014		254,397		259,960

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 3,442,642 (28 June 2015: 3,067,767 and 27 December 2015: 2,681,295).

Statutory earnings per share	Pence	Pence	Pence

Earnings per share - basic	12.8	4.0	30.2
Earnings per share - diluted	12.8	3.9	29.6

Adjusted* earnings per share	Pence	Pence	Pence

Earnings per share - basic	19.1	15.3	33.9
Earnings per share - diluted	19.1	14.9	33.2

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

	Pence	Pence	Pence

Contract termination fee	(0.6)	-	-
Impairment of goodwill	(0.6)	-	-
Provision for historical legal issues	-	(5.1)	(9.1)
Closure of print sites	-	(0.5)	(1.1)
Local World acquisition transaction costs	-	-	(1.9)
Gain on deemed disposal of Local World associate interest	-	-	13.2
(Loss)/profit per share - non-recurring items included in administrative expenses	(1.2)	(5.6)	1.1
Loss per share - non-recurring items included in share of results of associates	-	-	(0.5)
(Loss)/profit per share - total non-recurring items	(1.2)	(5.6)	0.6

11. Notes to the consolidated cash flow statement

	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Operating profit	53.6	19.6	82.2
Depreciation of property, plant and equipment	11.3	11.7	22.4
Amortisation of intangible assets	0.2	1.1	1.8
Impairment of goodwill	2.0	-	-
Share of results of associates	(0.2)	(2.0)	(2.2)
Charge for share-based payments	0.5	0.6	1.5
Gain on deemed disposal of Local World associate interest	-	-	(33.6)
Write-off of fixed assets	0.4	1.0	4.0
Pension administrative expenses	1.0	1.0	2.1
Pension deficit funding payments	(17.9)	(9.9)	(20.0)
Operating cash flow before movements in working capital	50.9	23.1	58.2
Decrease in inventories	0.1	1.3	1.1
Decrease in receivables	16.3	2.5	13.7
(Decrease)/increase in payables	(0.5)	15.1	(10.4)
Cash flow from operating activities	66.8	42.0	62.6

12. Net debt

The statutory net debt for the Group is as follows:

	27 December 2015 (audited) £m	Cash flow £m	Derivative financial instruments* £m	Foreign exchange* £m	Loan repaid £m	Transfer to current £m	3 July 2016 (unaudited) £m
Non-current liabilities
Loan notes	(67.6)	-	-	(8.3)	-	75.9	-
Term loan	(65.0)	-	-	-	-	6.0	(59.0)
	(132.6)	-	-	(8.3)	-	81.9	(59.0)
Current liabilities
Loan notes	-	-	-	-	-	(75.9)	(75.9)
Term loan	(15.0)	-	-	-	15.0	(6.0)	(6.0)
	(15.0)	-	-	-	15.0	(81.9)	(81.9)
Non-current assets
Derivative financial instruments	3.5	-	7.3	-	-	(10.8)	-
	3.5	-	7.3	-	-	(10.8)	-
Current assets
Cash and cash equivalents	55.4	44.9	-	-	(15.0)	-	85.3
Derivative financial instruments	-	-	-	-	-	10.8	10.8
	55.4	44.9	-	-	(15.0)	10.8	96.1
Net debt	(88.7)	44.9	7.3	(8.3)	-	-	(44.8)

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

The Group has a cross-currency interest rate swap to manage its exposure to foreign exchange movements and interest rate movements on the private placement loan notes. Fair value is calculated using discounted cash flows based upon forward rates available to the Group. The cross-currency interest rate swap is classed in level two of the financial instruments hierarchy. Level two fair value measurements are those derived from inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

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:

	27 December 2015 (audited) £m	Cash flow £m	Loan repaid £m	Transfer to current £m	3 July 2016 (unaudited) £m
Non-current liabilities
Loan notes	(68.3)	-	-	68.3	-
Term loan	(65.0)	-	-	6.0	(59.0)
	(133.3)	-	-	74.3	(59.0)
Current liabilities
Loan notes	-	-	-	(68.3)	(68.3)
Term loan	(15.0)	-	15.0	(6.0)	(6.0)
	(15.0)	-	15.0	(74.3)	(74.3)
Current assets
Cash and cash equivalents	55.4	44.9	(15.0)	-	85.3
	55.4	44.9	(15.0)	-	85.3
Net debt	(92.9)	44.9	-	-	(48.0)

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

	3 July 2016 (unaudited) £m	27 December 2015 (audited) £m

Statutory net debt	(44.8)	(88.7)
Loan notes at period end exchange rate	75.9	67.6
Loan notes at swapped exchange rate	(68.3)	(68.3)
Cross-currency interest rate swaps	(10.8)	(3.5)
Contracted net debt	(48.0)	(92.9)

13. Retirement benefit schemes

Defined contribution pension schemes

The Group operates the Trinity Mirror Pension Plan (the 'TMPP Scheme'), which is a defined contribution pension scheme for qualifying employees. The assets of the TMPP Scheme are held separately from those of the Group in funds under the control of Trustees. The TMPP Scheme has three sections, one for members who elected to join prior to 1 May 2013 which is now closed to new members, one for members who elect to join from 1 May 2013 and one for members from 1 July 2013 who are auto enrolled. Local World operates a Group Personal Pension Plan (the 'LW Plan'), which is a defined contribution pension scheme for qualifying employees where employees hold a personal pension policy directly with Scottish Widows.

The Group implemented the Auto Enrolment legislation from 1 July 2013. Local World will implement the Auto Enrolment legislation in 2017.

The current service cost charged to the consolidated income statement of £6.9 million (26 weeks ended 28 June 2015: £6.6 million and 52 weeks ended 27 December 2015: £13.3 million) represents contributions of £6.2 million (26 weeks ended 28 June 2015: £6.6 million and 52 weeks ended 27 December 2015: £13.1 million) paid to the TMPP Scheme by the Group at rates specified in the scheme rules and contributions of £0.7 million (26 weeks ended 28 June 2015: £nil and 52 weeks ended 27 December 2015: £0.2 million) paid into the LW Plan by the Group at rates specified in the scheme rules. All amounts that were due have been paid over to the schemes at all reporting dates.

Defined benefit pension schemes

Background

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 securing of members' benefits of the five smaller schemes by way of a buy-out with insurance companies without further contributions from the Group. As part of the winding up of these schemes, surplus assets have been transferred to one of the remaining schemes.

The remaining 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').

The Old Scheme and the Past Service Scheme cover the liabilities for service up to 13 February 1992 for employees and former employees who worked regularly on the production and distribution of Mirror Group's newspapers. The Old Scheme was closed on 13 February 1992 and the Past Service Scheme was established to meet any liabilities which are not satisfied by payments from the Old Scheme and the Maxwell Communications Pension Plan. No contributions have been paid to the Old Scheme since 1992. The disclosures contained in this note in respect of these two schemes are combined (the 'Old Scheme/Past Service Scheme').

13. Retirement benefit schemes (continued)

Defined benefit pension schemes (continued)

Characteristics

The defined benefit pension schemes provide pensions to members which are based on the final salary pension payable normally from age 65 plus surviving spouses or dependents benefits following a member's death. Benefits increase both before and after retirement either in line with statutory requirements or in accordance with the scheme rules. Such increases are either at fixed rates or in line with retail or consumer prices but subject to upper and lower limits. All of the schemes are independent of the Group with assets held independently of the Group. They are governed by Trustees who administer benefits in accordance with the scheme rules and appropriate UK legislation. The schemes each have a professional independent trustee as their chairman with half of the remaining Trustees nominated by the members and half by the Group.

Maturity profile and cash flow

Across the schemes, the invested assets at the prior year end were expected to be sufficient to pay the uninsured benefits due up to 2044, based on the reporting date assumptions. The remaining uninsured benefit payments, payable from 2045, were due to be funded by a combination of asset outperformance and the deficit contributions currently scheduled to be paid by 2025. The liabilities related 50% to current pensioners and their spouses or dependants and 50% related to deferred pensioners. The average term from the prior year end to payment of the remaining benefits was around 16 years. Uninsured benefit payments in 2015, excluding transfer value payments, were £44 million, projected to rise to an annual peak in 2039 of £82 million and reducing thereafter.

Funding arrangements

The funding of the Group's schemes is subject to UK pension legislation as well as the guidance and codes of practice issued by the Pensions Regulator. Funding targets are agreed between the Trustees and the Group and are reviewed and revised usually every three years. The funding targets must include a margin for prudence above the expected cost of paying the benefits and so are different to the liability value for IAS 19 purposes. The funding deficits revealed by these triennial valuations are removed over time in accordance with an agreed recovery plan and schedule of contributions for each scheme.

The valuations of the schemes as at 31 December 2013 were completed on 9 December 2014. The valuations showed deficits of £216.0 million for the Old Scheme/Past Service Scheme, £120.7 million for the MGN Scheme, £31.9 million for the Trinity Scheme and £26.7 million for the MIN Scheme. The next valuation date of the schemes is due as at 31 December 2016 with the valuations required to be completed by 31 March 2018.

As part of the agreement of the valuations, deficit funding contributions were agreed at £36.2 million for 2015, 2016 and 2017. Contributions remain at around £36 million from 2018 to 2023 and then reduce to around £21 million for 2024 and 2025 after which contributions are due to cease. The combined deficit was expected to be eradicated by 2027 by a combination of the contributions and asset returns.

In addition, the Group agreed that in respect of dividend payments in 2015, 2016 and 2017 that 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 conjunction with the £10 million share buyback announced today the Group has agreed additional funding of up to £7.5 million (including a minimum payment of £5 million), representing 75% of the share buyback.

During the first half of 2016, contributions paid to the defined benefit pension schemes were £17.9 million (26 weeks ended 28 June 2015: £9.9 million and 52 weeks ended 27 December 2015: £20.0 million). Payments were £10.0 million (26 weeks ended 28 June 2015: £5.4 million and 52 weeks ended 27 December 2015: £11.0 million) to the Past Service Scheme, £3.0 million (26 weeks ended 28 June 2015: £1.6 million and 52 weeks ended 27 December 2015: £3.3 million) to the MGN Scheme, £3.1 million (26 weeks ended 28 June 2015: £1.9 million and 52 weeks ended 27 December 2015: £3.7 million) to the Trinity Scheme and £1.8 million (26 weeks ended 28 June 2015: £1.0 million and 52 weeks ended 27 December 2015: £2.0 million) to the MIN Scheme.

Risks

Valuations for funding and accounting purposes are based on assumptions about future economic and demographic variables. This results in risk of a volatile valuation deficit and the risk that the ultimate cost of paying benefits is higher than the current assessed liability value.

The main sources of risk are:

· Investment risk: a reduction in asset returns (or assumed future asset returns);

· Inflation risk: an increase in benefit increases (or assumed future increases); and

· Longevity risk: an increase in average life spans (or assumed life expectancy).

These risks are managed by:

· Investing in insured annuity policies: the income from these policies exactly matches the benefit payments for the members covered, removing all of the above risks. At the reporting date the insured annuity policies covered 18% of total liabilities;

· Investing a proportion of assets in government and corporate bonds: changes in the values of the bonds broadly match changes in the values of the uninsured liabilities, reducing the investment risk. At the reporting date this amounted to 39% of assets excluding the insured annuity policies;

· Investing a proportion in equities: with the aim of achieving outperformance and so reducing the deficits over the long term. At the reporting date this amounted to 48% of assets excluding the insured annuity policies; and

· The gradual sale of equities over time to purchase additional annuity policies or bonds: to further reduce risk as the schemes, which are closed to future accrual, mature.

13. Retirement benefit schemes (continued)

Defined benefit pension schemes (continued)

The Group is not exposed to any unusual, entity specific or scheme specific risks. There were no plan amendments, settlements or curtailments in 2016 or during 2015 which resulted in a pension cost.

Actuarial projections at the prior year end showed removal of the accounting deficit by 2024 due to scheduled contributions and asset returns.

Results

For the purposes of the Group's 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 estimated value of the scheme assets at 3 July 2016.

The assets and liabilities of the schemes as at the reporting date are:

	Old Scheme/Past Service Scheme £m	MGN Scheme £m	Trinity Scheme £m	MIN Scheme £m

Present value of uninsured scheme liabilities	(662.6)	(552.9)	(344.4)	(114.5)
Present value of insured scheme liabilities	(178.1)	-	(78.6)	(106.2)
Total present value of scheme liabilities	(840.7)	(552.9)	(423.0)	(220.7)
Invested and cash assets at fair value	403.9	419.0	353.9	71.6
Value of liability matching insurance contracts	178.1	-	78.6	106.2
Total fair value of scheme assets	582.0	419.0	432.5	177.8
Net scheme (deficit)/surplus	(258.7)	(133.9)	9.5	(42.9)

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

	3 July 2016	28 June 2015	27 December 2015
Financial assumptions (nominal % pa)
Discount rate	2.80	3.80	3.65
Retail price inflation rate	2.75	3.20	3.05
Consumer price inflation rate	1.55	2.00	1.85
Rate of pension increase in deferment	1.55	2.00	1.85
Rate of pension increases in payment	3.75	3.90	3.85
Mortality assumptions - future life expectancies from age 65 (years)
Male currently aged 65	21.8	22.0	22.0
Female currently aged 65	23.8	23.9	24.0
Male currently aged 55	22.6	22.8	22.9
Female currently aged 55	24.7	24.8	24.9

The estimated impact on the IAS 19 liabilities and on the IAS 19 deficit at the reporting date, due to a reasonably possible change in key assumptions over the next year, are set out in the table below:

	Effect on liabilities £m	Effect on deficit £m
Discount rate +/- 0.5% pa	-180/+209	-155/+181
Retail price inflation rate +/- 0.5% pa	+28/-28	+20/-20
Consumer price inflation rate +/- 0.5% pa	+48/-46	+48/-46
Life expectancy at age 65 +/- 1 year	+79/-77	+71/-69

The effect on the deficit is usually lower than the effect on the liabilities due to the matching impact on the value of the insurance contracts held in respect of some of the liabilities. Each assumption variation represents a reasonably possible change in the assumption over the next year but might not represent the actual effect because assumption changes are unlikely to happen in isolation.

The estimated impact of the assumption variations make no allowance for changes in the values of invested assets that would arise if market conditions were to change in order to give rise to the assumption variation. If allowance were made, the estimated impact would likely be lower as the values of invested assets would normally change in the same directions as the liability values.

13. Retirement benefit schemes (continued)

Defined benefit pension schemes (continued)

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

Consolidated income statement		27 weeks ended 3 July 2016 (unaudited) £m		26 weeks ended 28 June 2015 (unaudited) £m		52 weeks ended 27 December 2015 (audited) £m

Pension administrative expenses	(1.0)		(1.0)		(2.1)
Pension finance charge	(5.2)		(5.5)		(10.9)
Defined benefit cost recognised in income statement	(6.2)		(6.5)		(13.0)

Consolidated statement of comprehensive income	27 weeks ended 3 July 2016 (unaudited) £m	26 weeks ended 28 June 2015 (unaudited) £m	52 weeks ended 27 December 2015 (audited) £m

Actuarial gain due to liability experience	0.6	-	23.9
Actuarial loss due to liability assumption changes	(215.6)	(1.1)	(16.0)
Total liability actuarial (loss)/gain	(215.0)	(1.1)	7.9
Returns on scheme assets greater/(less) than discount rate	82.5	8.1	(18.9)
Total (loss)/gain recognised in statement of comprehensive income	(132.5)	7.0	(11.0)

Consolidated balance sheet	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m

Present value of uninsured scheme liabilities	(1,674.4)	(1,495.9)	(1,481.4)
Present value of insured scheme liabilities	(362.9)	(362.9)	(352.2)
Total present value of scheme liabilities	(2,037.3)	(1,858.8)	(1,833.6)
Invested and cash assets at fair value	1,248.4	1,205.1	1,176.2
Value of liability matching insurance contracts	362.9	362.9	352.2
Total fair value of scheme assets	1,611.3	1,568.0	1,528.4
Net scheme deficit	(426.0)	(290.8)	(305.2)

Non-current assets - retirement benefit assets	9.5	17.6	29.4
Non-current liabilities - retirement benefit obligations	(435.5)	(308.4)	(334.6)
Net scheme deficit	(426.0)	(290.8)	(305.2)

Net scheme deficit included in consolidated balance sheet	(426.0)	(290.8)	(305.2)
Deferred tax included in consolidated balance sheet	76.5	58.2	55.0
Net scheme deficit after deferred tax	(349.5)	(232.6)	(250.2)

Movement in net scheme deficit	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m

Opening net scheme deficit	(305.2)	(301.2)	(301.2)
Contributions	17.9	9.9	20.0
Consolidated income statement	(6.2)	(6.5)	(13.0)
Consolidated statement of comprehensive income	(132.5)	7.0	(11.0)
Closing net scheme deficit	(426.0)	(290.8)	(305.2)
Changes in the present value of scheme liabilities	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m

Opening present value of scheme liabilities	(1,833.6)	(1,863.2)	(1,863.2)
Interest cost	(32.7)	(33.8)	(67.5)
Actuarial gain - experience	0.6	-	23.9
Actuarial gain/(loss) - change to demographic assumptions	28.5	(5.3)	(4.5)
Actuarial (loss)/gain - change to financial assumptions	(244.1)	4.2	(11.5)
Benefits paid	44.0	39.3	89.2
Closing present value of scheme liabilities	(2,037.3)	(1,858.8)	(1,833.6)

13. Retirement benefit schemes (continued)

Defined benefit pension schemes (continued)

Changes in the fair value of scheme assets	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m

Opening fair value of scheme assets	1,528.4	1,562.0	1,562.0
Interest income	27.5	28.3	56.6
Actual return on assets greater/(less) than discount rate	82.5	8.1	(18.9)
Contributions by employer	17.9	9.9	20.0
Benefits paid	(44.0)	(39.3)	(89.2)
Administrative expenses	(1.0)	(1.0)	(2.1)
Closing fair value of scheme assets	1,611.3	1,568.0	1,528.4

Fair value of scheme assets	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m

UK equities	183.3	196.8	181.7
US equities	206.3	192.0	192.8
Other overseas equities	215.2	224.2	210.7
Property	20.9	19.8	20.4
Corporate bonds	316.7	303.8	308.7
Fixed interest gilts	75.9	62.9	70.9
Index linked gilts	98.6	69.4	81.2
Cash and other	131.5	136.2	109.8
Invested and cash assets at fair value	1,248.4	1,205.1	1,176.2
Value of insurance contracts	362.9	362.9	352.2
Fair value of scheme assets	1,611.3	1,568.0	1,528.4

All of the scheme assets have quoted prices in active markets. Scheme assets include neither direct investments in the Company's ordinary shares nor any property assets occupied nor other assets used by the Group.

14. Provisions

	Share-based payments £m	Property £m	Restructuring £m	Other £m	Total £m
At 27 December 2015	(0.3)	(9.6)	(3.7)	(37.1)	(50.7)
Charged to income statement	-	-	(10.1)	(0.7)	(10.8)
Utilisation of provision	-	1.9	9.3	5.9	17.1
At 3 July 2016	(0.3)	(7.7)	(4.5)	(31.9)	(44.4)

The provisions have been analysed between current and non-current as follows:

	3 July 2016 (unaudited) £m	28 June 2015 (unaudited) £m	27 December 2015 (audited) £m

Current	(39.1)	(28.8)	(43.5)
Non-current	(5.3)	(11.8)	(7.2)
	(44.4)	(40.6)	(50.7)

The share-based payments provision relates to National Insurance obligations attached to the future crystallisation of awards.

The property provision relates to onerous property leases and future committed costs related to occupied, let and vacant properties. This provision will be utilised over the remaining term of the leases.

The restructuring provision relates to restructuring charges incurred in the delivery of cost reduction measures. This provision is expected to be utilised within the next year.

The other provision relates to legal and other costs relating to historical litigation expected to be utilised within the next year.

15. Share capital and reserves

The share capital comprises 283,459,571 allotted, called-up and fully paid ordinary shares of 10p each. In 2015, the Company placed 22,398,041 shares (at 158.0 pence) and issued 3,371,010 shares (at 174.3 pence) relating to the acquisition of Local World. The share premium account reflects the premium on issued ordinary shares. The merger reserve comprises the premium on the shares allotted in relation to the acquisition of Local World net of £0.8 million of issue costs. The capital redemption reserve represents the nominal value of the shares purchased and subsequently cancelled under share buy-back programmes. The Group obtained court approval at the end of April 2014 for a reduction in the share premium account of £514.8 million to eliminate the deficit on the Company's profit and loss account reserve. Profit generated by the Company after 30 April 2014 is available for distribution to shareholders.

Cumulative goodwill written off to retained earnings and other reserves in respect of continuing businesses acquired prior to 1998 is £25.9 million (28 June 2015: £25.9 million and 27 December 2015: £25.9 million). On transition to IFRS, the revalued amounts of freehold properties were deemed to be the cost of the asset and the revaluation reserve has been transferred to retained earnings and other reserves.

Shares purchased by the Trinity Mirror Employee Benefit Trust (the 'Trust') are included in retained earnings and other reserves at £5.6 million (28 June 2015: £8.6 million and 27 December 2015: £3.7 million). During the period the Trust purchased 1,600,000 shares (2015: nil) for a cash consideration of £2.0 million (2015: £nil). The Trust received a payment of £2.0 million from the Company to purchase these shares. During the period, 60,759 shares were released relating to grants made in prior years (26 weeks ended 28 June 2015: 2,119,839 and 52 weeks ended 27 December 2015: 5,929,939).

During the period 859,794 awards were granted to Executive Directors on a discretionary basis under the Long Term Incentive Plan (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015: 665,287). 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 and are required to be held for a further two years. During the period 1,431,028 awards were granted to senior managers on a discretionary basis under the Senior Management Incentive Plan (26 weeks ending 27 June 2015 and 52 weeks ended 27 December 2015: 893,873). 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 82,699 awards were granted to Executive Directors under the Restricted Share Plan (26 weeks ended 28 June 2015 and 52 weeks ended 27 December 2015: 120,543). The awards vest after three years.

16. Reconciliation of statutory results to adjusted results

27 weeks ended 3 July 2016 (unaudited)

	Statutory results £m	Non-recurring items (a) £m	Amortisation (b) £m	Pension charges (c) £m	Restructuring charges (d) £m	Finance costs (e) £m	Tax items (f) £m	Adjusted results £m
Revenue	374.7	-	-	-	-	-	-	374.7
Operating profit	53.6	4.1	0.3	1.0	10.1	-	-	69.1
Profit before tax	45.2	4.1	0.3	6.2	10.1	1.0	-	66.9
Profit after tax	36.0	3.2	0.3	5.0	8.1	0.8	-	53.4
Basic EPS (p)	12.8	1.2	0.1	1.8	2.9	0.3	-	19.1

26 weeks ended 28 June 2015 (unaudited)

Revenue	288.5	-	-	-	-	-	-	288.5
Operating profit	19.6	17.5	2.5	1.0	7.3	-	-	47.9
Profit before tax	12.1	17.5	2.5	6.5	7.3	1.1	-	47.0
Profit after tax	9.9	13.9	2.3	5.2	5.8	0.9	-	38.0
Basic EPS (p)	4.0	5.6	0.9	2.1	2.3	0.4	-	15.3

52 weeks ended 27 December 2015 (audited)

Revenue	592.7	-	-	-	-	-	-	592.7
Operating profit	82.2	5.7	4.3	2.1	15.3	-	-	109.6
Profit before tax	67.2	5.7	4.3	13.0	15.3	2.0	-	107.5
Profit after tax	77.0	(1.5)	3.9	10.4	12.2	1.6	(17.2)	86.4
Basic EPS (p)	30.2	(0.6)	1.5	4.1	4.8	0.6	(6.7)	33.9

(a) Non-recurring items relate to the items charged or credited to operating profit as set out in note 5.

(b) Amortisation of the Group's intangible assets and amortisation included in share of results of associates.

(c) Pension finance charge and pension administrative expenses relating to the defined benefit pension schemes as set out in note 13.

(d) Restructuring charges in respect of cost reduction measures as set out in note 14.

(e) Impact of the translation of foreign currency borrowings and fair value changes on derivative financial instruments as set out in note 7.

(f) Tax items relate to the impact of tax legislation changes due to the change in the future corporation tax rate on the opening deferred tax position as set out in note 8.

17. Contingent liabilities

There is potential for further liabilities to arise from the outcome or resolution of the ongoing historical legal issues. Due to the present uncertainty in respect of the nature, timing or measurement of any such liabilities it is too soon to be able to reliably estimate how these matters will proceed and their financial impact.

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the 27 weeks ended 3 July 2016 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement, the consolidated balance sheet and related notes 1 to 17. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

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

Directors' responsibilities

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

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union.

Our responsibility

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

Scope of review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the 27 weeks ended 3 July 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

1 August 2016

This information is provided by RNS

The company news service from the London Stock Exchange

END

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The Group's operations are located primarily in the UK. The Group's revenue by location of customers is set out below:

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