Island Press (Holdings) Ltd., the owners of the Bermuda Sun newspaper announced this week the company had made a profit of $562,758 for the year - a drop of 25 percent on the bottom line from a year earlier.

The company's newspaper made a small loss for the year and its publishing company a small profit with the bulk of the profits coming from "rental and other income". In fact the company made less money during the entire fiscal year than they did in the first six months of the 200 year, the company revealed in its figures published by the Bermuda Stock Exchange.

In a release issued by the company Chairman of Island Press, Randy French, said that he was "pleased" by the results and told shareholders that: "in general these results reflect and improvement on the prior year."

In June last year the company announced it had made a profit of $566,885 for the six months as of March 31, when it announced it had lost the contract to publish Bermuda's Yellow Pages. And a year earlier the company made a net profit of $749,706 for the year ended September 30, 2001.

The printing division, which includes commercial and retail and directory publishing, registered $8.7 million compared to $6.3 million a year before on sales, a rise of 38 percent. This sector made a net profit of $51,682 after posting expenses of $9.7 million - and a $1 million gain on forgiveness of a liability.

Publishing sales, made up of magazine and newspaper publishing, fell from $3.4 million to $3.2 million - a drop of seven percent. Expenses in this sector were $3.2 million leaving a net loss in this sector of $9,529. The main profit from the publishing company came from "rental and other income" which made $520,605.

Island Press said it has now focused on a new division, the Caribbean Publishing Company, which publishes yellow pages in the Caribbean mainly in conjunction with Cable & Wireless.

"These results are encouraging," said Mr. French in his directors report. "However, as stated in previous director's reports, commercial printing in Bermuda is a mature industry.

"As such, we have aggressively pursued and successfully secured, through acquisition and development, additional publishing opportunities in both the United States and the Caribbean.

"Furthermore, we are developing a venture involving the replacement, repair and maintenance of electrical control systems in Bermuda. This venture began operations in February 2003. It is expected that these and other opportunities will enable the development of future growth and increased profitability."

The financial statements from the company also reveal that the company has over $7 million in liabilities which includes an overdraft facility of $1.75 million in a bank in the Cayman Island. Another loan of a quarter of a million dollars is secured on a mortgage on the Island Press building on Elliot Street and a further $460,456 is secured by a $2 million floating charge over assets belonging to Island Press and a $1 million guarantee from Island Press (Holdings) Ltd.

Mr. French said that there were a number of factors contributing to the company's performance, which must be considered when looking at the results.

He said: "The most significant factor affecting the current year financial statements is the inclusion of the results of both Caribbean Publishing Company Ltd. ("CPC"), a directory publishing company acquired in May of 2002, and Bermuda Cruise Ltd for the twelve months ended September 30,2002.

"These balances have been included as a result of the acquisition of CPC and the consolidation of Bermuda Cruise Ltd. which in prior years was carried as an investment at cost. The prior year balances as presented in the financial statements do not reflect the results of both CPC and Bermuda Cruise Ltd."

Mr. French also said that operating revenues have increased by 22 percent and cost of sales have decreased by three percent as compared to the 2001 fiscal year.

"This has resulted in an increase in the company's gross profit margin from 41 percent in 2001 to 53 percent in 2002.

"Rental, interest and income have increased by 60 percent. In addition, we have recognised a gain of $328,146 relating to the forgiveness of debt as a result of the purchase of the CPC. General and administrative costs increased by 104 percent."