8.2 percent in 1996 as a result of continued shifts in the local economy away from tourism along with barriers to growth for its printing business.

For the year ended September 30, the company, which owns The Royal Gazette Ltd. and Bermuda Press Ltd., made $942,636, or 65 cents per share, compared to $1.03 million, or 71 cents per share in 1995. In 1994, profit was $1.2 million.

President Roger Davidson said in the company's annual report that the restructuring of the local economy had affected both of the company's main operating units.

"With all our customers reviewing their operations and introducing economies where possible, it is inevitable that those economies will impact our newspaper and our printing business,'' he said.

"Tourism has traditionally supported the majority of our customers. Although the growth of the financial services and insurance sector in Bermuda has provided a welcome replacement for revenue lost in many areas, it has not fully compensated for the changes in our markets.'' Mr. Davidson said the printing subsidiary cannot continue to pay Bermuda expenses and compete against duty free products.

"Shareholders will know that for many years we have been trying to convince Government that it is wholly unfair to expect a Bermudian printing company to compete with printers as far afield as China, with their entirely different cost structures,'' he said.

"We pay duty on plant and equipment and on the majority of our materials. We pay our staff competitive wages and we pay taxes. These support our local economy. Yet we are still expected to compete against duty free products from all over the globe,'' he said.

"We were pleased to note that Government officials have visited a number of Bermudian printing plants to see the current situation for themselves.'' The Island's major printing companies have made a presentation to Government but details would be inappropriate at this time, he added.

"A great likelihood exists that substantial further restructuring will take place in the printing industry if our presentation is not acted upon.'' Under the present conditions, no printer can justify future capital investment, he said.

Mr. Davidson also said that "for the first time in years'' advertising lineage and pages published were down at The Royal Gazette and the weekly Mid-Ocean News.

Those declines were offset by an increase in advertising rates in April, which resulted in revenues per column inch increasing marginally.

Total revenue rose to $18.9 million, up just two percent on 1995.

Newspaper publishing revenue, part of total revenue, rose marginally to $11.4 million. Printing revenue, also part of the total, rose to $4.5 million from $4.2 million.

For the year, expenses rose to $18 million from $17.6 million. Materials, merchandise and supply expenses, part of the total, were unchanged at $5 million. Payroll and employee benefits expenses, also part of the total, rose to $8.3 million from $8 million.

Net operating income fell from $970,202 to $942,636, a decline of three percent. 1995's net income was boosted by a $55,598 gain on the sale of an investment.