Good morning! I'm running a bit late today, as my computer decided to install 15 updates without warning, so apologies for that. Absolutely loads of IMSs (Interim Management Statements) this morning, but most are for FTSE250 companies, so that makes it a bit more manageable for me to just look at the small caps here.
Regulars will know that we did very well on Trinity Mirror (LON:TNI) shares last year, when I highlighted the deep value & irrational market price of the company. Even those of us who sold too early more than doubled our money, and people who held for a bit longer quadrupled their money from our 25p entry price. Not bad!
So I take a particular interest in their results, even though no longer a shareholder. Their IMS this morning seems positive overall to me. Revenue trends are improving, in that Mar/Apr showed a reduced rate of decline than Jan/Feb, but one must always remember that the core newspaper business is in the early stages of probably terminal decline. It's just a question of whether they will last another 5, 10, or 20 years, or somewhere in between.
However, in the meantime they still generate prodigious cashflow. Net debt has never been a problem, and this is reinforced by news that it has fallen another £25m to £132m in just 17 weeks to 28 April 2013. £10m cost savings are in the pipeline for 2013, and this is how TNI are maintaining high levels of profitability and cashflow - by stripping out costs as turnover falls. They say they are "confident in the outlook for the Group's performance in 2013", which looking at Stockopedia StockReport, shows 28.1p EPS for this year (ending 30 Dec 2013) and 28.0p for next year. At 94p that puts the shares on a very cheap PER of only 3.3.
There are only three repayments left on the private placement notes, which is all of TNI's net debt, since they rarely dip into their overdraft facility, £55m in Oct 2013, and £44m in Jun 2014, with the final one being £68m in June 2017. Therefore the group is not far away from being debt-free in terms of bank debt. However, there is also the large pension deficit. They are opaque about this, just saying that it fluctuates, therefore it's safe to assume…
