Bermuda Press (Holdings) Ltd Releases 2010 Annual Report

Hamilton, Bermuda – 24 February, 2011 – Bermuda Press (Holdings) Limited (“BPHL”; Ticker: BPH.BH) has released the audited 2010 Annual Financial Report to 30 September, 2010. The report can be accessed via www.bsx.com

In a report the Shareholders the Directors said:

As we reported last year, your company is engaged in a restructuring that involves a complete review of processes, streamlining of operations and building a digital platform from which a newly energised organisation will emerge.

This annual report is the first we have produced using a combination of lithographic and digital print solutions. The covers were printed on a lithographic press and the content pages on a digital press.  Quality digital production is relatively new to Bermuda, but it represents the future. With progress in the 21st century accelerating, it will probably not be long before we look back and wonder how anyone produced documents the old way.

In 2010, despite revenues falling to $30,682,000 from $33,107,000, net income increased to $316,000 from $63,000 last year.  Income from operations rose to $1,081,000 from $240,000 last year.  The increases in net income and income from operations are a result of increases in staff productivity; operating efficiencies and changing product offerings with a focus on profitability.  The Board anticipates similar improvements in future periods.

A few years ago, management of your company was heavily focused on diversification, adding real estate and other interests to the portfolio. That proved to be a wise decision and enabled us to build a company able to withstand the differing business cycles that occur in various market sectors. On that base, we have built an organisation that is withstanding what may prove to be the deepest economic downturn in Bermuda’s history.

The year 2010 will be remembered in Bermuda for the arrival of the difficult economic conditions that had affected all of our major trading partners earlier. Because Bermuda’s economic pulse tends to run behind those of the countries with which we trade, the Company was able to foresee the change in economic conditions that was coming, and resolved to act, rather than react.

Management has undertaken a painstaking review of every aspect of your company’s operations. Taking time to consider the best way forward, we concluded that the company should be recast, to reflect the changing economic conditions around us. We believe that management’s responsibility is not only to set a course and then follow it, but also to constantly monitor the course and make adjustments when they are necessary or prudent.

The largest change that we undertook in 2010 was at Bermuda Press. After reviewing the operations, we concluded that Bermuda Press could not continue as is. The contraction of the local print industry that had we have discussed for years has become critical. Reducing the size of a business operation is never the first choice, but after exploring other options, we elected to accept the inevitability of the changing Bermuda print market and, accordingly, downsized Bermuda Press with a new focus of hybrid production that combines traditional and digital printing to offer clients a cost effective solution while still offering excellent quality.

In 2011 Bermuda Press will be selling several lithographic presses and investing in new digital press equipment.  We believe that that by the middle of 2011 Bermuda Press will be even more firmly established as the leader in on-demand and digital printing in Bermuda.

Your Board determined that restructuring and a shift in its business model that preserved approximately half of the jobs at Bermuda Press was a better option than to let it further depreciate, with all hands lost. Had we not acted, Bermuda Press faced an uncertain and difficult future. Our actions, we believe, have resulted in a leaner and more sustainable operation at Bermuda Press.

The Royal Gazette, and our magazine division, Crown Communications, have also been subject to management review. Newspapers worldwide are reacting to the fait accompli of almost instant news reports on the Internet and we see The Royal Gazette gradually increasing its online presence.  Over the past few years the number of visitors to our website has increased dramatically.

Late last year, we revamped the website from the ground up, and now have a dynamic, informative and easy-to-navigate online publication that is updated frequently during each business day, reflecting the needs of our readership at home and abroad. As online content comes to dominate the way the world receives its news, we believe that the economics of web publishing, which have not as yet solidified into a profitable business model for many publishers, will gradually do so.

Ultimately the future for newspapers, as for so much else, is digital and online. We would be remiss if we did not plan accordingly. The distribution of the online edition of The Royal Gazette via Newsstand, an exact replica of the daily newspaper from cover to cover, is delivered early each morning to subscribers’ computers, at a lower cost than that of the hard copy edition.  A free sample may be obtained by visiting www.newsstand.com.

Demand for a print edition of the newspaper continues and it is expected to continue for years to come.  As a result, we are investing in additional press units that will expand our ability to produce colour and systems to automate registration. Registration is the process of aligning the different elements that create printed imagery. The additional colour capacity will allow for the standardisation of business processes and increase efficiency throughout the entire production cycle.

Crown Communications continues to publish Bermuda’s most-read magazines. RG Magazine and The Bottom Line each publish six times a year, in alternating months. The Insurance Journal, which has proved so successful as an annual publication for the past seven years, will be published quarterly in 2011, in response to demand from the insurance sector for more information and greater analysis. Crown also publishes one-off magazines when the opportunity presents itself. We have a number of new publications scheduled for 2011 and beyond.

The Stationery Store, Artcetera and Office Solutions continue to evolve to meet the changing needs of business in Bermuda.  In 2010, the management of these operations was consolidated into a single role and Bob Legere, who had successfully grown the Office Solutions business, was appointed general manager.  It is no surprise that the leasing and equipment markets have contracted as a result of businesses downsizing.  However, new product offerings and a shift towards a new fulfillment model are being well received.

It would be easy to blame the challenging economic environment for all our woes and thus abdicate responsibility for the future of your Company. It would also be wrong. Change is perhaps less appreciated in Bermuda than in some other countries, but that does not mean that Bermuda does not change, and quickly. Consider how very different in tone and tempo the Island has become in, say, the past 15 years. With the speed of change increasing, thanks to the advent of electronic communications, what might Bermuda be like 25 years from now? Your Board and management’s chief responsibility is to ensure that your company anticipates change, as far forward as is possible, and although it can often be a painful process, to ignore it would be to fall short in our duties.

Your company is evolving at a time when Bermuda is itself undergoing change. Economies that emerge from recession — as Bermuda’s will — never enter the recovery and then expansion stages of the cycle in the same condition as they were before the downturn. Bermuda is quickly having to coming to terms with the worst recession in memorable history and so is your Company. The Board and management of your Company have taken steps to ensure that The Bermuda Press (Holdings) Ltd. will emerge from the recession in good shape.

As we reported last year, Jonathan Howes, CA, formerly the Group Financial Controller, was appointed Chief Executive Officer of The Bermuda Press (Holdings) Limited at the start of the calendar 2010 year. His brief is to rationalise the company’s operations, take in hand the development of the new digital platform, restructure operations to reduce operating costs without compromising the core businesses, and to enhance shareholder value.

The vacant position of Group Financial Controller at The Royal Gazette Limited was reviewed during the restructuring process.  The Board felt that financial responsibility for the entire group should be consolidated into one role and created the position of Chief 

Financial Officer of The Bermuda Press (Holdings) Limited.  The Board welcomes Christine MacIntyre, CA, formerly a Senior Manager with PricewaterhouseCoopers Bermuda, who was appointed to the position of Chief Financial Officer in July 2010.

Two long-time managers at the company, Keith Jensen and Paget Wharton, retired from the company, although both continue to be of counsel. We are grateful to each for his dedicated service over the years.

Another noteworthy change in 2010 was the appointment of the Hon. Paula Cox, JP, MP as Bermuda’s 11th Premier. With her background in business affairs and her determination to set the Island’s economic ship to rights, we believe that the entire atmosphere in Bermuda is changing. We are confident that Premier Cox’s less confrontational approach will be to the benefit all Bermuda residents. The 2011/2012 budget released in February has shown signs of increasing fiscal responsibility within Government and we expect this will be welcomed by the business community.

Two years ago your Board agreed that Colombia House would be renamed the Roger Davidson Building to recognise the unique contribution of Roger Davidson to your Company's success.  Renovations to the building have been successfully completed and the formal renaming of the building will take place after the 2011 annual general meeting.

As a listed issuer on the Bermuda Stock Exchange, the Company is required to make certain public disclosures. We confirm that the total interests of all directors and officers of the Company in the shares of the Company amounted to 256,672 shares at 30th September 2010. 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.

At the time of this report, our shares last traded on the Bermuda Stock Exchange at $13.50. The dividend to shareholders was reduced to $.40 during fiscal 2010, a yield of approximately 3%. The Board continue to review the ability of the Company to pay dividends with the goal of increasing return to shareholders.

A company is only as good as its staff. Our staff continue to contribute their best efforts on the company’s behalf. We also appreciate the business relationships we have with readers, customers, suppliers and our tenants. Most of all, we appreciate the invaluable support of our shareholders and their faith in the company’s future, which we most heartily share.

Christopher R. Whittle

President

H. Michael King

Vice-President

Further Enquiries

Christine MacIntyre, Chief Financial Officer              (441) 278 0183