Cost-cutting measures and a brighter advertising market helped newspaper publisher Trinity Mirror to a 25.7 per cent rise in annual profits.
The improvement to £216.8 million came despite further pressure on circulation volumes, which Trinity Mirror said partly reflected the publication of fake Iraq prisoner abuse photographs in the Daily Mirror in May.
The controversy, which cost the then editor Piers Morgan his job, is estimated by the company to have caused a three per cent blow to the circulation of the national title.
Unveiling results above market expectations, Trinity Mirror said it was in "good shape both operationally and financially" after it met all its targets in the first full year of its "Stabilise Revitalise Grow" strategy.
Shares rose more than five per cent following the results, which featured a rise of 10.4 per cent in Trinity Mirror's annual dividend payment and a pledge to return up to £250 million of capital to shareholders through a buyback programme.
Excluding the impact of an additional week's trading, the company said turnover increased by 4.5 per cent to £1.13 billion with operating profits up 16.6 per cent to £244.2 million.
Operating margins increased by 2.3 per cent to 21.7 per cent after the company delivered annual cost savings of £28 million in 2004.
The improved trading environment pushed advertising revenues for the nationals division up by 3.9 per cent with the regionals estate enjoying a six per cent uplift. As well as five national titles, Trinity Mirror has 240 local and regional newspapers, including The Birmingham Post and Liverpool Echo.
The regionals division suffered a decline in circulation but more than offset the fall through cover price increases.
Overall, turnover from the estate was up 5.2 per cent at £535.7 million with operating profits ahead by 22.3 per cent at £ 147.7 million when excluding an extra week in the financial year. Operating margins for the regionals division improved by 4.2 per cent to 27.9 per cent.
Excluding the additional week's trading, operating margins increased by 3.9 per cent to 27.6 per cent.
Advertising revenue increased from £394.0 million to £417.8 million.
Trinity Mirror said the nationals division delivered a "robust performance in an extremely challenging and competitive marketplace".
Like- for- like revenues increased by 3.8 per cent to £510.8 million with profits ahead 4.7 per cent at £89.8 million.
Price rises meant circulation revenues increased by 6.5 per cent to £279 million, despite a 6.9 per cent fall in average volumes for the Daily Mirror over a 12 month period.
Market share was maintained at 20.3 per cent for the first five months of the year but closed the year at 19.5 per cent.
The company said the maintenance of market share would remain a key focus but that it would not be achieved at any price.
It said: "The emphasis will be on building profitability and enhancing shareholder value rather than maintaining market share at any cost in a marketplace characterised by
significant price cutting and marketing activity."
Sir Victor Blank, chairman of Trinity Mirror, said: "We are in good shape both operationally and financially.
"The management team is focused on growth, both organically from within our existing businesses, and by reviewing the opportunities for acquisition.
"We have both the talent and resources to achieve this and in returning capital to shareholders, we will not be inhibiting plans for growth."