Trinity Mirror plc Annual Report & Accounts 2010 Our strategic goal is to build a growing multi-platform media business, by developing and sustaining strong positions across print and digital, with products and services which meet the needs of our customers, both readers and advertisers. Trinity Mirror plc Annual Report & Accounts 2010 1 Who we are 1 2010 in context 2010 in context 2 Group at a glance 4 Regionals 8 Nationals During 2010 we continued to focus on the delivery of 12 Chairman and Chief Executive statement our clear and consistent strategy and this has enabled 18 Board and management team the Group to deliver a strong financial performance with operating profit* up 17.0% and operating margin* increasing to 16.2% from 13.8%. While revenue trends have improved they remain under pressure due to the economic environment. The Group has further strengthened its balance sheet Who we are during the year, with strong cash generation despite the Business review challenging revenue environment and continued pension 20 Group activities 20 Group strategy deficit funding. The Group has significant financial 20 Our marketplace flexibility and is trading well within its covenants. 21 Group performance 23 Regionals division 25 Nationals division Our acquisition of GMG Regional Media, in March, has 26 Central proved very successful, delivering a strong revenue 27 Balance sheet 29 Risks and uncertainties and profit performance during the year. The acquisition 30 Employees ew vi extends the Group’s reach across print and digital in e the North West and the South providing further scale r ess in these key geographies. in us Our investment in the modernisation of business B processes and structures throughout the Group, Governance via the implementation of the new operating model, 31 Corporate responsibility report 40 Corporate governance continues to reap sustainable efficiencies while 46 Remuneration at a glance supporting our strategic goal of building a multimedia 47 Remuneration report business of scale. New IT systems have enabled us 53 Directors’ report to re-engineer how we publish across editorial, advertising and pre-press. This has resulted in a step change in the way content is gathered and published across print and digital. Importantly we are not trying e to do the same things with fewer people. Instead, the technology enables fundamental changes to the overnanc entire publishing process, achieving efficiencies at a G significantly lower cost base without detriment to quality. Financials The business is leaner and fitter and well positioned 56 Group consolidated accounts for any upturn in market conditions. 57 Consolidated income statement 57 C onsolidated statement of comprehensive income 58 C onsolidated statement of changes in equity 59 Consolidated balance sheet 60 Consolidated cash fl ow statement 61 Notes to the consolidated fi nancial statements 100 Parent company accounts s 110 Group fi ve year summary l a 111 Shareholder information i c 112 Investor relations n a Fin * The adjusted results on pages 1 to 17 exclude the impact of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 38 on page 99. On a statutory basis revenue decreased from £763.3 million to £761.5 million, operating profit increased from £87.0 million to £138.0 million and earnings per share increased from 11.5 pence to 44.6 pence. Trinity Mirror plc 2 Annual Report & Accounts 2010 Group at a glance Trinity Mirror is one of the UK’s largest newspaper publishers. Our award winning Revenu e portfolio includes five national newspapers; x the Daily Mirror, the Sunday Mirror, The £ 761.5m 0.2% People, the Daily Record and the Sunday 2009: £763.3m Mail as well as over 160 regional titles including household names such as the O perating profit* Liverpool Echo, Manchester Evening News, Birmingham Mail, Western Mail and h £ 123.3m 17.0 % Newcastle Chronicle. 2009: £105.4m Our print titles are complemented by our digital portfolio of more than 500 digital O perating margin* products. These include companion websites, mobile sites and national platforms 16.2 % for recruitment and property advertising. 2009: 13.8% The Group is the largest contract printer of newspapers in the UK. We also own Pr ofit before tax* and manage national and regional events h including the Daily Mirror Pride of Britain £ 101.5m 39.6% Awards and the Great Scot Awards as 2009: £72.7m well as a number of exhibitions which extend the reach and influence of our brands. E arnings per share* The Group employs over 6,500 people h in around 60 locations across the UK, 2 8.6p 43.0% including nine print sites. The Group has two 2009: 20.0p trading divisions: Regionals and Nationals. Ne t debt^ x £ 265.9m 17.9% 2009: £324.0m * The adjusted results on pages 1 to 17 exclude the impact of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 38 on page 99. ^ On a contracted basis assuming the private placement loan notes and related cross-currency interest rate swaps are not terminated prior to maturity. Trinity Mirror plc Annual Report & Accounts 2010 3 Trading divisions Regionals Our Regionals division publishes a vibrant and diverse portfolio of market leading brands in print and digital media across the UK. 2010 saw a return to profit growth, with strong margin recovery and an improvement in revenue trends in the year. Revenue £m Revenue £m (including acquisitions) (including acquisitions) Who we are 3 331.2 302.9 2 1. Advertising £222.5m 1 h 2. Circulation £73.2m 9.3% 2009 2010 3. Other £35.5m Operating profit* £m Operating margin* % iew (including acquisitions) (including acquisitions) v e r 51.7 15.6 ess 35.9 11.9 n Busi h44.0% 2009 2010 2009 2010 Nationals Our Nationals division publishes five national newspaper titles which are among the UK’s leading media brands complemented by a strong, multi-platform portfolio of digital businesses, events and exhibitions. During 2010 the business demonstrated resilient profitability and margins. e Revenue £m Revenue £m overnanc 3 G 1 460.4 430.3 1. Advertising £128.8m x 2. Circulation £244.2m 2 6.5% 2009 2010 3. Other £57.3m Operating profit* £m Operating margin* % 83.6 86.1 18.2 20.0 cials n a h 2009 2010 2009 2010 n 3.0% Fi Trinity Mirror plc 4 Annual Report & Accounts 2010 Regionals Our Regionals division publishes a vibrant and diverse portfolio of Revenue market leading brands across the 2009: £302.9m UK with more than 160 regional daily and weekly titles and over Operating profit* 500 digital products. £ 51.7m 2009: £35.9m A strong portfolio of regional daily and weekly titles reaches the length and breadth of the country and Operating margin* serves some of the UK’s biggest cities and metropolitan areas. We have a strong presence in the North West of England and North Wales, the 15.6 % 2009: 11.9% North East, the Midlands, South Wales, Scotland and the South of England. Number of titles In our key markets, our brands have a significant reach amongst the adult population reaching 58% on a weekly basis in Scotland, 73% in the North 160+ East, 86% in the North West, 70% in the Midlands, 71% in South Wales and 56% in the South. Websites We publish 13 paid-for daily newspapers across the UK which have a circulation of just under half a million copies. We have three of the UK’s top 10 regional 500+ evening newspapers with the Manchester Evening News, Liverpool Echo and Newcastle Chronicle. We publish over 70 paid-for weekly titles which includes three of the top 10 regional Sunday titles: Sunday Sun in Newcastle, the Sunday Mercury in Birmingham and the Wales on Sunday. In addition we publish around 80 free weekly titles and six metro titles. Overall our regional newspapers have a weekly circulation figure of 6.4 million copies and readership of 7.7 million. Our digital portfolio complements our print titles and extends our reach across our markets. We publish a wide range of digital products including companion websites to our key newspaper titles, hyperlocal sites serving specific communities and local and national recruitment and property websites. In the recruitment category, we publish a network of specialist job sites, including leading brands such as GAAPweb, totallylegal, totallyfinancial, PlanetRecruit, SecsintheCity and The Career Engineer and generalist brands such as fish4. Our property websites include Smartnewhomes and email4property. Our websites attract 11.1 million unique users every month, up 17% year on year. trinitymirror.com/our-portfolio/regionals * The adjusted results on pages 1 to 17 exclude the impact of non-recurring items, the amortisation of intangible assets, the retranslation of foreign currency borrowings, the impact of fair value changes on derivative financial instruments and the impact of tax legislation changes. A reconciliation between the adjusted results and the statutory results is provided in note 38 on page 99. Trinity Mirror plc Annual Report & Accounts 2010 5 Who we are iew v e r ess n Busi e overnanc G cials n a n Fi Trinity Mirror plc 6 Annual Report & Accounts 2010 Trinity Mirror plc Annual Report & Accounts 2010 7 Who we are Regionals readership iew v e r ess m n 7.7 Busi Unique users m per month 11.1 e overnanc G cials n a n Fi Trinity Mirror plc 8 Annual Report & Accounts 2010 Nationals The Nationals division publishes the Daily Mirror, the Sunday Mirror Revenue and The People across the £ 430.3m 2009: £460.4m UK and the Daily Record and the Sunday Mail predominantly Operating profit* in Scotland.