Trinity Mirror's dramatic rise continues

Trinity Mirror, best known as the publisher of five national newspapers, has continued its dramatic bounce back from an all-time low of 27p during the summer.

Its share price has collapsed over the past couple of years due to concerns about falling ad revenues and circulation figures from its newspapers, high levels of debt and an ongoing pensions deficit.

However, sentiment appears to have changed with the arrival of new management and the belated recognition that the business is being turned around with a move into digital channels and a reduction in debt.

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New managementFirst came the arrival in August of a new Chairman, David Grigson, a big-hitter who knows the media business. He was a financial director at Emap in the 90s and chairman of Emap Digital, before becoming financial director at Reuters; helping to restructure its failing businesses and leading it into a successful merger with Thomson in 2008.

This was followed on August 30th by the news that Simon Fox -boss of HMV- was leaving to become Chief Executive at Trinity Mirror. "He was dealt a losing hand, but he moved them into live-Music which is where the money is these days in music," comments Managing Editor John Harrington at Digital Look.com.

Reduction in debtStrong cashflows have enabled a reduction in net debt from £265.9m at the start of 2011 to £180.9m by the time of its interims to July 1st.

A major concern has been its pensions deficit, although it is making progress in this area. At the end of 2011 its pensions deficit stood at £230m, yet by July 1st it had fallen to £209.9m. In parallel, the company successfully managed to reduce overpayments on its pensions from £33m a year to £10 m a year for the next three years (until 2015); and these liabilities, while significant, appear manageable, some observers believe.

One point -in particular- that appears to have been overlooked by many investors is the possibility that Trinity Mirror could unlock the value of its property assets. The nominal book value of its freehold assets was £176.8m as of 1 January 2012, equivalent to approximately 68 pence a share.

The opportunity of a strong bounce-back from these levels is probably the reason that it can still number the following among its major shareholders: Schroder (16.7%), Aviva (11.5%), Standard Life (9%), Royal London Asset Management (5.3%), BlackRock (4.9%), JP Morgan (4.9%) and Old Mutual (4.9%).

Consensus estimates for the year ending December 31st 2012 are for earnings per share of 26.75p, putting the company on a price earnings ratio of just over 2.

CM