The Company has continued to see modest growth in revenue during the first six months of the 2008 fiscal year.  Net income for the six months ended 31st March 2008 was $1,167,028, which compares with $1,199,729 for the same period in the previous year.  A slow start to the year in the printing division and rising operating costs throughout the Company has kept net income virtually consistent with the previous period, overshadowing the continued positive growth in revenue.

The global economic slowdown is putting pressure on Bermuda’s economy. A weaker United States’ economy and currency have eroded the buying power of the Bermuda dollar in non-US denominated countries such as Canada and the United Kingdom. Soaring global oil prices, the general slowing of United States’ and United Kingdom’s new home construction, along with the difficulties in the sub-prime lending markets are affecting our major trading partners’ economies.

Local inflation continues to climb, driven heavily by the declining buying power in foreign markets, the booming local construction industry, and by rising fuel surcharges on items such as electricity, air and marine transportation. Local duty, levied on the importation of goods and materials from overseas, is compounding the inflation problem as increased costs overseas translate into increased duty collected by Government.

For the past several years the Company’s divisions have been responding to higher costs by exploring areas for greater efficiencies. In the current year, increases in health benefit costs and a legislated increase in the employer portion of payroll tax (increasing from 8.75% to 9.25%, a 5.7% change) are impacting the Company’s cost structure. The Board has responded by reviewing the group structure for areas where divisional functions can be consolidated and new efficiencies found. The Board’s focus on evolving business models and information technology is seen as key to the future growth of the Company. Many initiatives are currently under way to improve and to introduce new services to customers utilizing improved information systems.

The business impact of Government’s decision to cease advertising in The Royal Gazette is not fully evident in this period since it was implemented during March 2008. Efforts have been made by the Company to control costs further and additional sources of revenue are being sought to ameliorate the immediate effects of the Government’s decision that many view as vindictive.  We believe that most of our readers who formerly benefited from Government subscriptions are now purchasing their own copies, some through Newsstand.com, which provides an identical newspaper delivered electronically.

The Board believes Government’s action has served to endorse one of the primary functions that the newspaper has in the community. It has placed the spotlight on the role of The Royal Gazette as watchdog over Government, in particular its use of taxpayer funds and it has highlighted that freedom of speech is a fundamental issue affecting all Bermudians. The Board is grateful for the overwhelming support of the public and remains hopeful of a sensible resolution.

During the first half of 2008, Urban and Associates conducted readership and advertiser surveys in Bermuda. The Board is pleased to report that The Royal Gazette is still the overwhelming number one medium selected by both advertisers and the Bermuda public.

In March 2008 the merger of the Artcetera and Stationery Store operations into one was successfully completed. The expansion of Chameleon Print Express into the space previously occupied by Artcetera is progressing well and will be completed in July.

The Board is please to announce that Christopher Whittle and Michael King were elected President and Vice-President, respectively, at the Annual General Meeting on March 14, 2008. Both Mr. Whittle and Mr. King have been Directors for many years and the Board is confident your Company will continue to evolve and expand under their leadership.

Dividends to shareholders are currently being paid quarterly at a rate of 19 cents per share. This rate should continue as the Company maintains satisfactory levels of profitability.

The total interest of all Directors and Officers of the Company in the shares of the Company at 31st March 2008 amounts to 258,337 shares. No rights to subscribe for shares in the Company have been granted to or exercised by any director or officer.

The Board of Directors wishes to acknowledge the efforts of our employees to enhance relationships with our customers and ensure your Company’s continued success.