Trinity Mirror to pay first dividend in six years
Chief executive Simon Fox promised shareholders a 3p divi at the end of the year
Monday 28 July 2014
Trinity Mirror has taken a £4m hit because of legal bills associated with the investigation into phone-hacking at the red-top newspaper group, though there was relief that the financial cost was not higher.
Its shares jumped nearly 6 per cent to 188.75p as investors welcomed the group’s promise that it would pay a dividend for the first time in six years as its financial health improves.
The owner of the Daily Mirror, Sunday Mirror and The People said it was setting aside £4m for “dealing with and resolving historical legal issues” related to hacking allegations.
Asked if Trinity Mirror had settled any case of alleged illegal behaviour, Simon Fox, the chief executive, said: “We absolutely haven’t made any decisions about whether ‘resolving’ involves settling. Nor does that wording rule it out.”
Analysts at Barclays said the £4m figure was “somewhat reassuring – given that the market was previously free to speculate on the risk of a very large total exposure”. Trinity faces about 17 civil cases brought by individuals that relate to hacking.
Mr Fox declined to comment on the outcome of the recent News of the World trial, in which the former editor Andy Coulson and other journalists were convicted of offences related to phone hacking. Dan Evans, a former Sunday Mirror and News of the World reporter, was a witness during the trial. He has admitted hacking voicemails at both papers and was given a suspended jail sentence last week.
Mr Fox described the decision to restore the dividend as a “material moment” after the group ran up big debts and deferred payments into its pension scheme before he took the helm in 2012. He promised a 3p dividend at the end of the year and hopes to increase the dividend to 5p next year. Digital growth of nearly 50 per cent in the main publishing business during the first six months of this year has helped to halt falling revenues, with group turnover dropping by just 2.3 per cent to £324.2m.
Sales were down just 1.4 per cent in May and June at the publisher of the Daily Mirror as Fox said the group is moving towards a tipping-point where digital offsets print decline.
He hopes to increase the dividend to 5p next year and added financial flexibility meant that it could consider acquisitions.
Vijay Vaghela, group finance director since 2003 when previous boss Sly Bailey was in charge, hailed “a significant turnaround” after the group ran up big debts and deferred payments into its pension scheme.
Net debt has plunged to £56 million from £324 million at the start of 2010.
“In the period prior to Simon, there was a strong focus on cash management, profit management and costs,” said Vaghela, referring to Bailey’s troubled tenure, which lasted until 2012. “The strategy for driving the top line was less clear.”
Fox has pushed into digital, launching news-lite website UsVsTh3m and dating service Mirror Match.
However, digital amounted to only about £22 million of sales — still less than 7 per cent of group turnover.
Pre-tax profits rose by two-thirds to £50.5 million, buoyed by a windfall from selling its stake in Press Association’s weather business.
Trinity Mirror also took a £4 million charge because of legal costs from the phone-hacking investigation.
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