Trinity's asset sell-off could bring in £600m

Trinity Mirror revealed yesterday it is to announce the first in a series of three planned disposals in a matter of weeks as it delivered one of its most upbeat trading updates for some time.

The publisher of the Daily Mirror and Daily Record titles said that although the advertising environment remains "volatile from month to month" it continues to see improved stability as the rate of decline slows.

Sly Bailey, the chief executive, has been insisting for a while that the downturn in advertising revenues is cyclical in nature, despite many believing that advertising has permanently migrated to the web.

Yesterday, the group revealed advertising revenues for the 26 weeks to 1 July are expected to fall by 1.5 per cent. In the first four months the decline was 2.4 per cent, which indicates an improvement in May and June. The company added that "the board continues to have confidence that its 2007 performance will be in line with expectations".

Trinity Mirror said it continued to make progress on the disposal of the sports division and its regional businesses in the Midlands and the South-east. Analysts have been predicting the Racing Post, the UK's only horseracing daily, to fetch £190m, and the disposals in total to bring in between £500m and £600m. Analysts at Numis believe the disposals will lead to a return of capital worth 100p a share to investors, depending on pension and tax requirements.

The company has been in talks with Festina Lente Partners, an investment vehicle led by Irish investors Peter Crowley and Neill Hughes, who are both former Bank of Ireland corporate financiers. The disposals are expected to be completed by the end of the company's third quarter.

Trinity said advertising revenues for its regional titles are expected to fall by 1.6 per cent while revenues for its national division are expected to fall by 2.4 per cent. The Scottish nationals, the Daily Record and Sunday Mail, are set to achieve growth of 2.3 per cent but the UK nationals - the Mirror, Sunday Mirror and People - will fall by 4.1 per cent.

Group circulation revenues for the period are seen rising by 0.7 per cent. Meanwhile, digital revenues will rise 25.2 per cent in the regionals and 16.2 per cent in the nationals following website relaunches at the Liverpool Echo and the Mirror.

Rogan Angelini-Hurll, an analyst at Citigroup, said the statement confirmed its overall view on the UK newspaper group "where we have been seeing less negative advertising trends".

But Andrew Walsh, of Bridgewell, pointed out that Johnston Press and the Daily Mail and General Trust had recently expressed fears about the effect of interest rate increases on the consumers, which would be equally applicable to Trinity Mirror.