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Annual General Meeting 12 May 2011

Annual General Meeting 12 May 2011. Overview. Strong performance in the continuing challenging environment Considerable rise in profits Increased operating margin and reduced costs Earnings per share up Strong cash generation Significant fall in net debt Improvement in pension deficit.

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Annual General Meeting 12 May 2011

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  1. Annual General Meeting 12 May 2011

  2. Overview • Strong performance in the continuing challenging environment • Considerable rise in profits • Increased operating margin and reduced costs • Earnings per share up • Strong cash generation • Significant fall in net debt • Improvement in pension deficit

  3. Nationals – resilient through the downturn • Nationals performed strongly in 2010 demonstrating resilience through the downturn • Our national journalism remains in high demand • Our titles provide news and analysis readers can trust • Delivered in a package that’s easy to consume and popular with advertisers

  4. Nationals – competitive market place • National newspaper market remains highly competitive • Continued cover price discounting by our competitors • Our titles performed well in challenging trading environment • Continued to have higher proportion of full rate sales than any competitors • Broadly maintained advertising volume market share during year demonstrating continued relevance and importance to advertisers • Strong market positions of our UK brands ensured advertising revenues grew for most of 2010

  5. ContentWatch – more efficient newsrooms • Implemented ContentWatch editorial production system across UK Nationals • Created more flexible, efficient multimedia newsrooms • Not trying to do same things with fewer people • Using new technology we’ve made fundamental changes to the publishing process • Reduction in editorial staff of around 200 • Eliminated outdated ways of working, producing content across multiple channels • Each title retains quality, integrity and identity – clearly demonstrated by our coverage of the Royal wedding

  6. Post-ContentWatch Pre-ContentWatch ContentWatch – more efficient newsrooms • For our readers and advertisers there is no difference in quality • Achieved a considerably and permanently lower cost base • Changed traditional skills to reflect emerging platforms and preserve financial health of our titles

  7. Nationals – reach and influence remains strong • The Daily Mirror & Daily Record achieved an average joint circulation in excess of 1.5 million copies per day with readership of nearly 4 million per issue • Average joint circulation of Sunday Mirror, The People and Sunday Mail of 2 million copies per week with readership of over 6 million per issue • Sunday Mail still biggest selling newspaper in Scotland with circulation of nearly 100k copies higher than next best-selling title in 2010 • Sunday Mail readership 46% greater than next best-read Sunday title in 2010

  8. Digital content • Across the market publishers following different strategies and business models • Our view is that consumers are more prepared to pay for content: • via tablet and smartphone applications • some niche high-value web content • Little propensity for consumers to pay for general news content on web • TM has no plans to introduce paywalls to its websites • Will experiment with payment for some highly-valued Regionals content, ie, business coverage • Online audience figures continue to show good growth – April 2011, 25.6m unique users, up 38% on like-for-like basis - and websites will remain a primarily ad-driven model • Paid for apps in development for launch later in 2011

  9. Regionals – good progress • Challenging year across regional newspaper industry • Good progress in our own business • Revenue mix changing – reliance on cyclical ad categories of recruitment, property and motors reduced to 34% • Increased proportion of the less cyclical and more structurally robust display revenues to 45% of ad revenues • Digital revenues represented almost 10% of regionals revenues and 18% of profits, with underlying profit growth of 26% in 2010 • Big story of the year is our acquisition of GMG Regional Media

  10. Regionals – GMG acquisition • Described by one analyst as ‘the deal of the decade’ • It’s a great business and we’re delighted with its performance • GMG comprises • MEN Media (Manchester Evening News and weekly titles and websites across Greater Manchester) • S&B Media (Surrey Advertiser amongst other weeklies and websites in the South)

  11. GMG Regional Media – performing well • Great strategic and highly accretive acquisition • Already seeing benefits of increased reach and scale across both print and digital • Sharing best practice between our existing and acquired businesses and investing • Equipped the business with new revenue generating tools - Local Mole digital directory, self-serve advertising product • Launched Greater Manchester Business Week in November 2010 • Business relocated from Manchester city centre and Stockport to Chadderton, Greater Manchester site in 2010

  12. Acquisition of Fish4 • Fish4 fits perfectly alongside other businesses in our digital recruitment portfolio, GAAPWeb, TotallyLegal and SecsInTheCity • Increases our overall share of the online recruitment market, and cements our position in the generalist sector • Ambitious plans for Fish4 future and recent rebrand and redesign well received • In 2011 we forecast around 45% of our entire recruitment revenues will come from digital • A strong base for future growth when cycle improves

  13. Power of scale in regional media • We believe in the power of scale in regional media • Can be an important driver of value for shareholders • Will consider further regional consolidation opportunities where there is strong financial case and good commercial and strategic fit

  14. Diversification and revenue development • Improved financial position allows investment in growth and diversifying revenues • Commenced a number of new initiatives • New customer relationship management (CRM) system to drive advertising revenues through better customer and data insight • increase customer numbers • improve customer retention • increase customer value • New digital content management system for increased functionality of our digital platforms • integration of social media • improvement in editorial speed around breaking news • flexibility to publish on any device • integration with Contentwatch resulting in better ad targeting and new revenue opportunities

  15. Diversification and revenue development • Further staff and infrastructure investment in our digital marketing services offering • Widen product offering, customer base and increase revenues • In addition to print and digital advertising, clients want help with: • website design and build • search engine optimisation • email marketing • social media • online PR • web analytics • Acquired small digital marketing services business in 2008 – Rippleffect – to meet growing demand • Encouraged by what they’ve achieved and plan to develop expertise as strong as print and digital advertising • This is the future of local media – now is the time to invest

  16. Conclusion • 2010 challenging but business in good shape • Produced a strong set of numbers • Macro conditions difficult and continue to affect the share price • Confident we have the right strategy • Business restructured and modernised with a changing revenue mix • Well-positioned to take full advantage from any upturn • Focusing on diversifying and growing revenues as we continue to invest for the future

  17. Annual General Meeting 12 May 2011

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