Good morning!

I was tempted to have a duvet day today, as it's fairly quiet for news. Although rummaging through the RNS, there's enough of interest to justify putting fingers to keyboard.


Johnson Service (LON:JSG)

Share price: 92.3p (up 0.3% today)
No. shares: 330.6m
Market cap: £305.1m

AGM statement (trading update) - the key message reassures:

"As announced on 29 April 2016, all of the Group's businesses continue to trade in line with management's expectations...

The group is growing through acquisitions:

We are particularly pleased to have completed the earnings enhancing acquisitions of Portgrade Limited (Afonwen) and Chester Laundry Limited (Chester Textiles) at the end of April 2016, which will complement the acquisitions of Ashbon and Zip that have also been completed since our last AGM.  The integration of all of these businesses is well underway and in line with our plans.

Although the balance sheet is becoming stretched, with (in my view) too much debt, and an inadequate tangible net asset base (it was negative when last reported). See my report here on 1 Mar 2016 for more details.

Although I note that the most recent acquisition was part-funded with a placing to raise £28.5m

The outlook comments sound fine:

We remain confident in the prospects for the full year and in the longer term outlook for the Group.

My opinion - it's easy to grow earnings through acquisitions, especially when debt is cheap, and the economy reasonably buoyant, as it is now. However, when the next recession strikes, things might become a lot more difficult.

The main business is now supplying linen on hire to the hospitality sector, so it's a fairly cyclical business, with many customers going bust in recessions.

When you take into account the debt, the valuation looks about right to me.


Trinity Mirror (LON:TNI)

Share price: 120.5p (up 6.6% today)
No. shares: 283.5m
Market cap: £341.6m

Trading update - covering the 4 months to 1 May 2016.

The trading environment for print advertising continues to be volatile. We continue to focus on the delivery of our strategy, namely growing our digital audience and revenue, coupled with tight management of the cost base. At this stage, the Board anticipates performance for the year will be in line with market expectations.

Whilst it's good to see an "in line" expectation, the use of the phrase "At this stage..."…

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