Mirror Profits Fall 40% As Murdoch Launches Sunday Sun

Bad industry, bad management, bad investment.

Personally I only invest long but I see there is a lot of shorting activity going on and I can understand why.

Hi Roland,

Interesting article no doubt, but I personally think you've been a little one eyed on a number of fronts - but I'll pick just two :

The "price war" with the Sun on Sunday - so you think TNI have "capitulated" by reverting to their normal cover price? Personally I think it is a smart margin oriented move, but more importantly it seems likely that the Sunday Mirror will be doing better than had TNoW not disappeared - they will have gained some long term readers during the gap & the initial indications are the the Sunday Sun is a less attractive proposition than was the NoW.

A more material finance related point is that you make a big point of the fact that TNI will use short term debt to repay the long term debt due in June this year.

Yes I would agree that using your credit card to repay your mortgage is not normally that smart. But consider this :

> In the year just gone TNI reduced NET debt by £45m and made actual (gross) debt repayments of £145m.

> They delivered Operational Cashflow of £76m and total cashflow of £100m.

> They have to repay £70m in June.

My reading is that the incoming cashflow will not cover this by June but should be the year end or at the worst case early next FY - hence the use of "Credit Card debt" makes sense here.

Secondly on this point you assert that : "in order to secure its latest bank facility, Trinity has had to negotiate a reduction in pension deficit payments"

> Well yes this is clearly true at face value, but you present this as if the Pension Trustees are a bunch of pussy cats that just roll over and have their tummy tickled by whatever TNI propose.
> NOT SO - Pensions Trustees have a lot of power these days when it comes to vetoing business operation decisions (with my DayJob hat on I curse this, but in the round I agree with it - pensions are deferred wages that have already been "paid"/guaranteed.)
> Bottom line is that the pension trustees have only agreed to this because it is reasonable to do so. In fact I have seen compelling analysis to suggest that after this 'hiatus' there will be no need to increase payments to the previous level.

The bottom line for me is here that whilst I am quite happy for investors to have a strategy that exclude "risky" debt situations - because there are enough other opportunities not to need them. It still exclude certain Strong opportunities that fall outside these parameters.

Whilst mildly risky - I would argue that TNI is worth at lest 3 x the current share price assuming it doesn't go bust (which I think is only a moderate risk).

So it should not be considered by ultra-safe investors but on balance for those prepared to be exposed to a little risk.

Regards,

Aleyan
Who is a TNI Shareholder (small) but otherwise has no connection.

This article is nonsense, because he completely overlooks the fact that TNI's Balance Sheet is stuffed full of freehold property! (which has not been revalued). Freehold property is approaching £200m book value, hence covers pretty much ALL of TNI's net debt!

The pension fund is under control, and deficit shrinking, looks fine compared with the £100m p,a, cashflow the business throws off.

By the way, your startling claim that profit figures were down 40% is particualrly misleading as this fails to strip out one-off gains etc. The underlying figure was down from 30p to 27p. I rally think you shouldtry to do better.