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Transcontinental Reports Solid Q1: Thanks to Acquisitions

Press release from the issuing company

March 12, 2003 – Transcontinental continued to report net income growth in the first quarter of 2003, thanks in particular to the acquisitions made in 2002 and the many efficiency improvement measures implemented under the Corporation’s Horizon 2005 business project which offset difficult market conditions in certain niches. Consolidated revenues rose 10% to $475 million for the first quarter of 2003 compared to $433 million for the same period a year ago. Operating income before depreciation and amortization increased to $77 million versus $70 million in 2002, up 10%. This growth stems from the prompt and successful integration of acquisitions made in 2002, which during the quarter added $57 million to revenues and $12 million to operating income before depreciation and amortization. Net income rose 10%, from $27.6 million in 2002 to $30.3 million in 2003; on a per share basis, it rose from $0.67 to $0.68. Excluding the non-recurring gain of $0.03 per common share reported in the first quarter of 2002 following the sale of a building, earnings per share increased 6%. Of note, the average number of shares outstanding rose from 41.3 million in the first quarter of 2002 to 44.3 million in the first quarter of 2003 following the issue of 3 million shares that took place during 2002. Cash flow from operations grew 16%, from $52 million in the first quarter of 2002 to $61 million in 2003. “We are satisfied with the growth in our first quarter results despite the difficult market conditions which were anticipated in the 2002 Management’s Discussion and Analysis,” said Daniel Denault, Vice President and Chief Financial Officer of Transcontinental. “The integration of the newspapers acquired in 2002 in the Atlantic Provinces and Saskatchewan, the largest transaction in Transcontinental’s history, was completed during the quarter. Because of our expertise in the integration of companies and the excellent cooperation of managers and employees at those newspapers, the synergies in the Media sector, combined with those that will be achieved once the printing of certain newspapers is transferred to new facilities, should exceed the initial target of $5 million on an annual basis. We also implemented productivity improvements and sales development strategies through our Horizon 2005 project, which will generate additional benefits in upcoming quarters.” “The Corporation continued to maintain a solid balance sheet and is in an excellent position to pursue its growth,” concluded Mr. Denault. “The pursuit of initiatives to increase the Corporations revenues and improve efficiency implemented as part of our Horizon 2005 business project will offset the effects of difficult market conditions. Management is therefore maintaining its earnings per common share guidance of $3.20 to $3.35 for 2003, assuming that the negative effects related to current geopolitical tensions do not bring about a deterioration of economic conditions.”