"The Company's financial year ended 30th September 2001 was a period of considerable change. Careful management and a successful strategy of diversification have resulted in the Company recording a solid financial performance against the odds.
Compared with last year, total revenue increased to $28 million, primarily as a result of an additional $1.7 million in other revenue. Net income from operations declined by $0.2 million (12%) to $1.7 million while net income, including non-recurring capital asset transactions, was $2.2 million.
The Bermuda Press (Holdings) Limited is Bermuda's leading publisher, commercial printer and source of office equipment and supplies. We operate in related industries that work in an atmosphere of intense competition, locally and internationally. Another constant we face is technological change and the growing importance and uses of telecommunications.
The quality of an enterprise is most clearly evident in its people. This annual report includes photographs of some of the more than 200 people employed by the Company. Many of them have spent the greater part their working lives with us. We highlight them in this way to pay tribute to all our staff, whose efforts make the Company's progress possible.
The effects of the terrorist attacks in the United States on 11th September 2001 have resonated around the world. There has been a fundamental change in the way the world is perceived. We mourn the loss of Bermudians Rhondell Tankard and Boyd Gatton.
For the local economy, the greatest adverse impact is being felt in the hospitality industry and the retail trade. In any economy, and especially in one as small as Bermuda's, everyone's fortunes rise and fall together. The cycle of relatively good financial health that Bermuda has enjoyed since the middle of the 1990s is now being replaced by the harsh realities of recession. Developments in the Island's insurance and reinsurance sector are encouraging, but may produce imbalance in an economy not well positioned to cope with the cold economic winds blowing on tourism. Bermuda has grown accustomed to the synergies available from the twin pillars of tourism and international business on which its success was built.
Bermuda's short-term future may severely test the mettle of its Government. Demands for leadership and economic assistance will likely proliferate. We continue to hope that, in addressing the fundamentals of the economy, Government will focus on the needs of local business and maintain the downward trend in import duties which handicap the local commercial printing and publishing industry.
As shareholders are aware the Company has gradually diversified, the wisdom of which has now been underlined.
Crown House, which the Company built on our property at Par-la-Ville Road, was completed and opened at the start of this financial year. We have entered into long term leases for four floors and medium term leases for the remaining floors. During the year we sold a 20% interest in Crown House Properties Limited to a long term tenant. The financial effect of the Company's ownership and long term lease arrangements of Crown House and Colombia House has had a stabilising influence on our earnings.
Some of the people photographed for this report work in our newspaper offices on Par-la-Ville Road. They work in our editorial, photographic, information technology, advertising, production and accounting departments and management. Many of them were partners in the installation, this year, of new editorial, production and telephone systems.
In the cycle of production of a newspaper, time is of the essence. The new systems affect every phase of how we produce newspapers. The fact that our staff found time to install, test, confirm and bring online new computer systems significantly changing the way they do their jobs is a tribute to the belief our people place in the importance of their work.
The new systems have many advantages. They allow for greatly increased speed of production and will influence future costs. Editorial staff enjoy wider design options. Bottlenecks and the use of paper in the production process are
reduced. The Company's investment in new systems, including the cost of staff training, new digital cameras for our photographers and a new telephone system will position us well for the future.
The total number of pages published by The Royal Gazette and its sister publication, the Mid-Ocean News, increased slightly this year. Having introduced regular front-page colour last year, The Royal Gazette increased its frequency this year, further enlivening the newspaper's appearance and its appeal to readers. The Mid-Ocean News continues its balanced coverage of events.
During the year we began the overnight printing and distribution of the international edition of The Miami Herald, the first foreign newspaper to be printed in Bermuda. The production process relies on the systems with which we have produced TV Week for more than a year. Our success with The Miami Herald is strong evidence of the Company's capabilities in an increasingly global world.
We continue to publish portions of The Royal Gazette and the Mid-Ocean News on our GazetteNet pages on the Internet (www.accessbda.bm), which are updated daily to allow overseas readers to follow local events. This winter, a new website, integrated with our new computer systems, will be the final element in the evolution of our production process.
At Crown Communications, RG Magazine, Bermuda's most widely-read colour magazine, celebrated its 100th issue this year. Rebecca Zuill was appointed managing editor during the year following the departure of Chris Gibbons. Starting in 2002, both RG and The Bottom Line will be produced six times a year, schedules better suited to the needs of our advertisers.
The multimedia Bermuda Communications Directory published by Bermuda Directories Limited, in which the Company has a controlling interest, will this year be distributed to all households in Bermuda. The directory is published on the Internet (www.bermudadirectory.com).
The Company published a special afternoon edition of The Royal Gazette on 11th September 2001, as well as important supplements on St. George's becoming a World Heritage site, and the first annual edition of Law Matters, devoted to Bermuda's legal community. In May we produced a landmark 58-page magazine in partnership with XL Capital and its suppliers, to mark the opening of XL House on Bermudiana Road.
Newspapers in Education, a classroom enrichment programme, is our initiative to make a contribution to the education of our young people. This year, the programme has been expanded to deliver 3,000 newspapers, twice a week, to schools throughout Bermuda. We also provide teachers with lesson plans based around the local and international sections of the daily newspaper.
This year we commissioned and published more than 200 special articles on careers in Bermuda, which were reprinted as part of a 56-page broadsheet supplement to accompany the 2001 Careers Fair, of which the Company was a major sponsor. We remain fully committed to the Bermuda community by way of publicised and unpublicised charitable donations and sponsorships, sometimes in co-operation with others.
Modern print technology demands continuous investment. The Bermuda Press Limited this year added, and Premier Jennifer Smith was kind enough to officially launch, a second Heidelberg press, similar to the unit we purchased two years ago.
The Bermuda Press routinely turns out printed products of the highest quality for the Company and other clients. Its powerful new equipment enables Bermuda Press to take on, and deliver with increasing efficiency and outstanding quality, projects that once went to overseas printers. We believe that Buy Bermuda should be more than a catchphrase to attract consumers; it also needs to be embraced by businesses, Government and agencies to support local print firms.
In the heat of competition from local and foreign printers, results for our commercial printing division were satisfactory. Our commercial printing services cover the spectrum in Bermuda, providing first-class products of the highest quality at highly competitive prices. Corporate reports, brochures, magazines such as the Bermudian, This Week in Bermuda, The Bottom Line and RG Magazine are all produced to international printing standards. Under The Bermuda Press Limited's banner, Pronto Print and Print Express serve different sectors of the short-run, quick turnaround printing business in Bermuda. Our market coverage in this area is another product of the Company's diversification programme.
Over the years, our operations in the office products and equipment sector and art supplies market have been built on a foundation of reliable products and excellent service. In this year of change and diversification, Office Solutions was proud to add to its Canon dealership the distribution of Sharp office products. With a renewed emphasis on business-related products, The Stationery Store and Office Solutions have become leaders in their markets, serving the needs of the local and international business community.
As a listed issuer on the Bermuda Stock Exchange, the Company subscribes to the appropriate regulations governing the listing of its shares. We accordingly confirm that the total interests of all directors and officers of the Company in the shares of the Company amounted to 162,294 shares at 30th September 2001. We also confirm that no rights to subscribe for shares in the Company have been granted to or exercised by any director or officer and that the Company has no service or consulting contracts with any of its directors. Finally, we confirm that there were no contracts of significance subsisting during or at the end of the financial year in which a director of the Company is or was materially interested, either directly or indirectly.
The current trading value of the Company's shares on the Bermuda Stock Exchange continues to trail substantially the historical net asset value. We believe that the inherent value of the Company's shares does not warrant the discount accorded them.
An organisation facing the changes the Company has instituted this year relies for its success on every single employee. As ever, we thank all the Company's employees for their efforts during the year. We also thank our customers and shareholders for their continued support.
The Board of Directors lost a source of valuable advice and unwavering support this year when Eldon Trimingham retired from the Board in accordance with our bye-laws. He has given the Company sterling service for many years and we shall miss his counsel. Hotelier Muriel Richardson was appointed in his place and we look forward to her active involvement.
In these difficult times, the Company will continue to look for and secure opportunities to diversify in our continuing quest to provide good returns to investors. If the downturn in the Bermuda economy becomes a deep recession, the challenge for all companies will be to maintain investment in staff and production processes, while earning meaningful returns for the Company's future and its shareholders. We believe that the Company is well positioned to meet this challenge."
On behalf of the Directors of The Bermuda Press (Holdings) Limited: