The closure of the News of the World has helped boost
The company's deflating top line was made worse by "significant" inflation in newsprint prices, which rose £9m in the first half and "are increasing further in the second half". To combat this, the group's cost savings target has been raised by a further £10m to £25m. Stripping out exceptional items which dented the reported figures, the margin squeeze was still severe as operating profit slumped 23 per cent to £47.1m on a modest 3 per cent decline in revenue.
Trinity Mirror also has £382m of borrowings to contend with, of which a £145m repayment is due in October and a further £69.7m next June. The company has cash on its balance sheet of £120m and potential to draw down £179m of untapped facilities, which run until June 2013. But the schedule is tight.
Numis Securities is expecting full-year adjusted EPS of 24.5p (28.6p in 2010).
|TRINITY MIRROR (TNI)|
|ORD PRICE:||42p||MARKET VALUE:||£108m|
|TOUCH:||41.5-42p||12-MONTH HIGH:||130p||LOW: 34p|
|DIVIDEND YIELD:||nil||PE RATIO:||1|
|NET ASSET VALUE:||*||NET DEBT:||£239m|
|Half-year to 3 Jul||Turnover (£m)||Pre-tax profit (£m)||Earnings per share (p)||Dividend per share (p)|
*Negative shareholders' funds of £729m
The improvement in trading in July is a positive and, rated on 3.5 times cash profits to enterprise value (net debt and market value), the speculative shares rate good value.
Last IC view: Good value, 44p, 26 July 2011