View from the board: read all about it

With advertising revenue continuing to head south during the summer, Trinity
Mirror has already warned the market not to expect great news when it reports
its interim results today.

So what have finance director Vijay Vaghela and chief executive Sly Bailey
got to do to halt the slide at the Daily Mirror’s publisher?

What’s happened?

At its annual general meeting, Trinity Mirror highlighted the fact that the
advertising environment remained weak and that the management team, under new
chairman Sir Ian Gibson, would continue to run the business on the assumption
that this is going to continue for the rest of the year.

Then in June it issued a pre-close trading statement saying that on a
like-for-like basis, excluding acquisitions completed in 2005 and 2006, group
advertising revenues for the

26 week period up to 2 July 2006 were expected to fall by 10.6% year on year.
This profit warning had the inevitable impact on share price.

What’s going to happen?

Clearly it has been a tough period for the group – Trinity Mirror’s guarded
outlook underlines the torrid market conditions the newspaper group has had to
contend with over the past 12 months, with revenue growth hit by sluggish
consumer spending and a migration of classified advertising to the internet.

Analysts say that the ship needs to be stabilised while awaiting an upturn in
advertising. But although the immediate revenue outlook is bleak, Bailey and
Vaghela have proved themselves well able to cut their cloth accordingly by
taking out cost. The web is taking advertising from traditional media, but
Trinity is gaining a decent foothold online, snapping up suitable web-based
businesses.

The group, and especially its sports daily the Racing Post, has also seen off
competition from The Sportsman, which slipped into administration two weeks ago.

And it will see the benefit of pocketing £41.5m through its sale of magazine
and exhibitions business Inside Communications.

Twenty million people a week read at least one Trinity Mirror publication,
which is a valuable market. The share price will inevitably continue to drop
after the interims are published, but if the stock market continues not to
recognise the value of that readership, a bidder may do so. And that would be
something to keep Vaghela on his toes.

IN GOOD COMPANY

Trinity Mirror FD Vijay Vaghela is in good company when it comes to being at
the financial helm of a ‘troubled’ publishing group.

In July, Emap’s FD Ian Griffiths saw his FHM to Magic group announce that
revenues for the year were likely to be ‘flat’. This was followed by Gcap, the
media house responsible for Capital Radio, which said that advertising had been
hit by the World Cup. FD Wendy Pallott and the rest of her board were having
difficulty with the ‘limited visibility’ of the market.