Net income for Bermuda Press (Holdings) Ltd. - owners of The Royal Gazette and the Stationery Store - fell nearly a third for the six months ended March 31, 2002 as revenue did not keep pace with expenses.

Releasing an Interim Report to shareholders yesterday, president of Bermuda Press (Holdings) Ltd. Roger Davidson reported that revenue for the six months ended March 31 2002 increased 2.6 percent from $13,712,625 in the prior year to $14,076,003.

Net income from operations for the six months ended March 31 2002 however was $678,481, a decline of 15.5 percent from $802,918 for the same period last year.

Net income dropped 32.6 percent to $633,607 compared to $940,495 for the same period last year.

A 32 cent per share dividend totalling $441,678 was paid for the six months ended March 31 2002, the exact same as the year before.

Earnings per share for the six months ended March 31 2002 were 46 cents compared to 68 cents the year before.

In a letter to shareholders, Mr. Davidson said: "In comparison with last year, net income from operations declined $124,437 with revenue not keeping pace with expenses. As a result of the recent significant investment in capital assets, depreciation has contributed substantially to this increase in expenses."

Mr. Davidson also said the events of September 11 and their consequences contributed to these results. He said: "While the negative impact of terrorism on our economy has been ameliorated by the growth of international business, this economic stimulus benefits primarily those who provide services directly to such business; prevents the real estate market from deflating and provides an immediate boost to sales of office furnishings and equipment. However it may overstimulate the labour market leading to a rise in local costs. Thus the economic impact on our markets is mixed."

Mr. Davidson said the company's response has been to maintain the quality of services and to reduce expenses wherever possible, at the same time seeking to create new revenue opportunities.

He said: "Bermuda's economy as never before is particularly vulnerable while events unfold as far away as the Israeli/Palestinian conflict. The degree of risk surrounding another potential terrorist attack in the United States may lead to a further downturn in the North American economy with world-wide consequences."

Mr. Davidson told shareholders: "As the course of economic events unfold locally and internationally, your company has a diversified base of revenue. With effective management we shall emerge from the current economic difficulties just as we have following previous recessions: leaner, more resilient and better prepared to meet the challenges ahead."

Mr. Davidson concluded: "I should like to take this opportunity to acknowledge the support we have received from our customers and shareholders and in particular to thank our staff for their contributions during these difficult times."

The total interests of all directors and officers of the company in the shares of the company at March 31, 2002 amounted to 162,294 shares. No rights to subscribe for shares in the company have been granted to or exercised by any director or officer.