Trinity Mirror plc

1 Mirror plcAnnual report 2017 Trinity Mirror plc annual report 2017 Strategic report 01-30In summary01 Chairman s introduction02 Chief Executive s introduction03 Our business04 Strategy and KPIs09 Our audience11 Our people12 Risks and uncertainties16 Group financial review20 Divisional financial review27 Governance 31-70 Chairman s governance introduction31 Board of directors32 Corporate governance report34 Nomination Committee report40 Audit & Risk Committee report41 Remuneration report46 Corporate responsibility report61 Directors report67 Financial Statements 71-116 Independent auditor s report71 Consolidated income statement77 Consolidated statement of comprehensive income77 Consolidated cash flow statement78 Consolidated statement of changes in equity78 Consolidated balance sheet79 Notes to the consolidated financial statements80 Parent company balance sheet112 Parent company statement of changes in equity112 Notes to the parent company financial statements113In this reportWelcome to the Trinity Mirror plc annual report for the 52 weeks ended 31 December 2017 Trinity Mirror is the largest commercial national and regional news publisher in the UK, producing and distributing content through newspapers and associated digital platformsDisclaimerThis annual report is sent to shareholders who have elected to receive a hard copy and is available on our website for those shareholders who have elected to receive a copy electronically.

2 In this document, references to the Group , the Company , we or our are to Trinity Mirror plc and its subsidiaries. A reference to a year expressed as 2017 is to the 52 weeks ended 31 December 2017 and a reference to a year expressed as 2016 is to the 53 weeks ended 1 January 2017 . References to the year and the current year are to 2017 and references to last year and the prior year are to 2016. The annual report contains forward-looking statements. By their nature, forward-looking statements involve a number of risks, uncertainties and future assumptions because they relate to events and/or depend on circumstances that may or may not occur in the future and could cause actual results and outcomes to differ materially from those expressed in or implied by the forward-looking statements.

3 No assurance can be given that the forward-looking statements will be realised. Statements about the directors expectations, beliefs, hopes, plans, intentions and strategies are inherently subject to change and they are based on expectations and assumptions as to future events, circumstances and other factors which are in some cases outside the Company s control. The annual report has been prepared on the basis of the knowledge and information available to directors at the date of its preparation and the Company does not undertake any obligation to update or revise the information during the financial year ahead. It is believed that the expectations set out in these forward-looking statements are reasonable, but they may be affected by a wide range of variables which could cause actual results or trends to differ materially.

4 The forward-looking statements should be read in the context of the principal risk factors set out on pages 16 and 17 of the Strategic further information or to read the annual report online, go to Mirror plc annual report 2017 Strategic ReportGovernanceFinancial StatementsIn summaryResilient performance in a difficult trading cash flows further reducing net debt with financial flexibility to invest, to grow dividends and over time to meet pension have made continued progress with our strategic initiatives to grow digital display and transactional revenue, whilst tightly managing our cost base to support profits and cash flows. We continue to launch new products and we completed the acquisition of Northern & Shell s UK publishing Board remains confident that our strategy will meet our objective to deliver sustainable growth in revenue, profit and cash flow over the medium resultsRevenue : profit 9 7.

5 9 m2016: per : per : results1 Like for like revenue1 : : profit : 14 5 .1m2016: debt3 : cash flow4 : : per share3 6 .1p2016: addition to the financial performance measures above, the Group is focused on a number of other key performance indicators to deliver the Group s strategy. These are set out in the strategy and key performance indicators section on page 10 of the Strategic The Company presents the results on a statutory and adjusted basis and revenue trends on a statutory and like for like basis. The Company believes that the adjusted results and like for like trends will provide investors with useful supplemental information about the financial performance of the Group, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key performance indicators used by management in operating the Group and making decisions.

6 Although management believes the adjusted basis is important in evaluating the Group, they are not intended to be considered in isolation or as a substitute for, or as superior to, financial information on a statutory basis. The alternative performance measures are not recognised measures under IFRS and do not have standardised meanings prescribed by IFRS and may be different to those used by other companies, limiting the usefulness for comparison purposes. Note 36 and note 37 in the notes to the consolidated financial statements respectively sets out the reconciliation between the statutory and adjusted results and the reconciliation between the statutory and like for like Adjusted operating profit ( million) plus depreciation ( million).3 Borrowings ( million) less cash and cash equivalents ( million).

7 4 Cash flow before borrowing repaid and draw down on bank facility as set out in the cash flow on page 24 of the Strategic Points 1. Strong cashflow remains a core strength of the Group2. 10 million share buyback completed in November 20173. Dividend increased by See page 31 for Chairman s Governance introductionThis is my last annual report as Chairman, following my notice to step down at the 2018 annual General Meeting. It has been a memorable six years serving the Company, and I will depart in May knowing that the Board and the Group are in good hands with the appointment of Nick Prettejohn on 6 March 2018. Nick joins us from Scottish Widows and Lloyds Banking Group plc where he is currently serving as Chairman and non-executive director respectively, and I would like to extend him a warm welcome to the would like to express special thanks to the Board for their support and wish them and the Group the very best of luck for the the Company moves into its next chapter, we remain aware of the external landscape and how it is rapidly changing.

8 The Board remains committed to ensuring that it drives shareholder value whilst appropriately managing the interests of other key stakeholders such as our pension schemes, our debt providers and our staff. We continue to believe that managing the business well in difficult circumstances, and having clear plans to return your Company to growth in the medium term, will ultimately be to the benefit of all those whose livelihoods depend on the future success of your Company, whether as pensioners, members of staff or shareholders. I hope that this annual report demonstrates that our strategy is consistent with this goal. Dividends and share buybackI am delighted to confirm that the Board proposes a final dividend of pence per ordinary share, bringing the total dividend for the year to pence per ordinary share, a year on year increase of The Board continues to adopt a progressive dividend policy and expects dividends to increase by at least 5% per annum.

9 You can find details of the Board s dividend policy on page 68 of the Directors strong cash generation enabled the Board to successfully complete a 10 million share buyback programme in November 2017 . PensionsWe remain totally committed to appropriately funding our long-term pension obligations. We continue to work closely with the Trustees of our pension schemes to balance the need to fund the pension deficit, with the need to invest in the business and ensure we create value for our shareholders. Alongside the 10 million share buyback programme the Board made a million contribution to the pension payments to fund historical pension deficits were million in 2017 . We have finalised the 2016 triennial valuations and have agreed to pay annual contributions of million from 2018 to have also made additional commitments to our pension schemes as part of the acquisition of Northern & Shell s UK publishing assets, and you can see the details of this on page 8 of the Strategic report .

10 FinancingI am pleased that the business continues to generate strong operating cash flows which remains a core strength of your Company. Net debt was only million at the end of strong cash flows present the business with secure financing and increased financial legal issuesWe made good progress on settling civil claims. We increased the provision for dealing with these historical matters by million in 2017 reflecting increased costs of settling claims. The Board remains confident that claims arising from these historical events are manageable and do not undermine the delivery of the Group s composition Part of my role as your Chairman is to ensure that your Board has the necessary skills, knowledge and experience to make informed judgements that are in the best interests of all the stakeholders in your can find details of the membership of the Board on pages 32 and 33.