The impact of Government's decision to stop advertising in The Royal Gazette will not be fully felt until the second half of this year.

That is according to Bermuda Press (Holdings) Ltd.'s six-month statement to shareholders, which said that following the move by Government to cease advertising in March, efforts have been made by the company to control costs further.

Additional sources of revenue are being sought to reduce the effect of the decision that "many view as vindictive", the statement added.

The company also believes that most of its readers who previously benefited from Government subscriptions were now buying their own copies, some through the electronic version via Newsstand.com. "The board believes Government's action has served to endorse one of the primary functions that the newspaper has in the community," the statement read.

"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 the year, Urban and Associates carried out a readership and advertiser survey in Bermuda, with The Royal Gazette being chosen as the number one medium by both advertisers and the public.

In March 2008, the merger of the Artcetera and Stationary Store operations into one was successfully completed, with the expansion of Chameleon Print Express into the space previously occupied by Artcetera progressing well and work expected to be completed in July.

Other highlights of the report included a 5.7-percent increase in health benefit costs from 8.75 percent to 9.25 percent, which impacted on the company's cost structure, with the board responding 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," the report read. "Many initiatives are currently under way to improve and to introduce new services to customers utilising improved information systems."

As reported in yesterday's edition, BPH's profits for the six-month period dropped 2.7 percent to $1.17 million, while revenue rose slightly to $17.86 million.