<PAGE>

                                 HOLLINGER INC.
                  RELEASE OF ALTERNATIVE FINANCIAL INFORMATION

         Toronto, Ontario, Canada, March 4, 2005 - Hollinger Inc. ("Hollinger")
(TSX: HLG.C; HLG.PR.B) today released financial information in the form of an
unaudited consolidated balance sheet as at September 30, 2004, together with
notes thereto, prepared on an alternative basis, as described below (the
"Alternative Financial Information"). The Alternative Financial Information was
prepared by management of Hollinger and has not been audited or reviewed by
Hollinger's auditors.

         The Alternative Financial Information includes the accounts of
Hollinger and those wholly-owned subsidiaries which carry out head office
functions and which do not represent investments. Investments in other companies
and subsidiaries, such as Hollinger International Inc. ("Hollinger
International"), are not consolidated but rather are carried as investments and
are accounted for at their market value. The Alternative Financial Information
has been prepared in accordance with Hollinger's traditional accounting policies
with the exception that it has been prepared as though Hollinger had always
accounted for its assets and liabilities at their market values.

         The alternative financial information is presented in lieu of the
filing by Hollinger of its statutory financial statements with applicable
Canadian securities regulatory authorities. Hollinger has been unable to file
its statutory financial statements as at and for the year ended December 31,
2003 and the first three quarters of 2004 as a result of a series of
difficulties Hollinger has experienced, including Hollinger's loss of control of
Hollinger International in or about November, 2003 and the continued
insufficient co-operation by Hollinger International and Hollinger
International's auditors.

         Hollinger intends to continue to provide bi-weekly updates on its
affairs until such time as it is current with its filing obligations under
applicable Canadian securities laws.

Company Background

         Hollinger's principal asset is its interest in Hollinger International
which is a newspaper publisher, the assets of which include the Chicago
Sun-Times, a large number of community newspapers in the Chicago area and a
portfolio of news media investments, and a portfolio of revenue-producing and
other commercial real estate in Canada, including its head office building
located at 10 Toronto Street, Toronto, Ontario.

Media contact:
Larry Parnell
Hill & Knowlton
416-413-4623
larry.parnell@hillandknowlton.ca

                              www.hollingerinc.com


<PAGE>


Market Value Information
Consolidated Balance Sheet
September 30, 2004
(in thousands of Canadian dollars)
(unaudited)

<TABLE>
<S>                                                                   <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents                                             $  15,328
Restricted cash  (note 3)                                                13,743
Accounts receivable                                                       1,051
Amounts due from related parties (note 4)                                72,127
Prepaid expenses                                                          1,148
                                                                      ---------
                                                                        103,397

Investments (note 5)                                                    367,463
Property and equipment (note 6)                                           8,495
Deferred financing costs                                                 14,078
                                                                      ---------
                                                                      $ 493,433
                                                                      =========

LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued expenses                                 $  32,646
Amounts due to related parties (note 4)                                  28,183
Income taxes payable (note 7)                                             6,358
                                                                      ---------
                                                                         67,187

Long-term debt (note 9)                                                 117,626
Retractable preference shares (note 8)                                   17,352
Amounts due to related parties (note 4)                                  25,738
Future income taxes (note 7)                                             39,147
Other liabilities (note 4)                                                  679
                                                                      ---------
                                                                        267,729
                                                                      ---------
NET ASSETS REPRESENTING SHAREHOLDERS' EQUITY
Capital stock (note 10)                                                 286,602
Net unrealized decline in assets                                        (67,354)
Net unrealized decrease in liabilities                                      603
Retained earnings                                                         5,853
                                                                      ---------
                                                                        225,704
                                                                      ---------
                                                                      $ 493,433
                                                                      =========

Net asset value per retractable common share                          $    6.46
                                                                      =========
</TABLE>

Contingencies and commitments (note 11)
Subsequent events (note 13)

See accompanying notes.

<PAGE>


HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


1.  SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

As part of the Company's 1997 issuer bid, Hollinger Inc. (the "Corporation")
became an open-end investment holding company. The Corporation's retractable
common shares (the "Common Shares") are retractable at the option of the holder
for an amount based on the market value of the Corporation's assets, on a
non-consolidated basis, and during 1999, the Corporation's Series II preference
shares became retractable for an amount based on the market value of Hollinger
International Inc. ("International") common shares.

This consolidated balance sheet includes the accounts of the Corporation and
those wholly-owned subsidiaries which carry out head office functions and which
do not represent investments (together, the "Company"). Investments in other
companies and subsidiaries are not consolidated but rather are carried as
investments and are accounted for at their market value.

This consolidated balance sheet has been prepared in accordance with the
Corporation's traditional accounting policies with the exception that it has
been prepared as though the Corporation had always accounted for its assets and
liabilities at their market values.

This consolidated balance sheet has not been audited or reviewed by the
Corporation's auditors. This alternative financial information is presented in
lieu of statutory financial statements as a result of the Corporation's
inability to file its statutory financial statements as at and for the year
ended December 31, 2003 and the first three quarters of 2004. This inability
results from a series of difficulties the Corporation has experienced including
the Corporation's loss of control of International on or about November 17, 2003
and International's and International's auditors' continued insufficient
co-operation with the Corporation.

As a result of the inability by the Corporation to file its statutory financial
statements on a timely basis, the Ontario Securities Commission and certain
other provincial securities regulatory authorities issued cease trade orders
that prohibit certain current and former directors, officers and insiders of the
Corporation from trading in securities of the Corporation, until two full
business days after the Corporation's required filings are brought up to date in
compliance with applicable Canadian securities law. The Corporation has been
granted an extension of the time for calling its 2004 annual meeting of
shareholders to June 30, 2005.

The Company has experienced significant operating cash flow deficiencies and is
restricted from making certain payments under the terms of the senior secured
notes (note 9) and escrow agreement (notes 13 d) and e)). Because of
International special dividends received in 2005 (note 13), despite the funds
being held in escrow, the Company has sufficient funds available for general
corporate purposes. This consolidated balance sheet has been prepared on the
basis that the Company will continue to operate as a going concern.

Accrual method of accounting

This consolidated balance sheet has been prepared using the accrual method of
accounting.


                                  Page 2 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


Foreign currency translation

Monetary items denominated in foreign currency are translated to Canadian
dollars at exchange rates in effect at the balance sheet date and non-monetary
items are translated at exchange rates in effect when the assets were acquired
or obligations incurred. Foreign exchange gains and losses are included in
shareholders' equity on the balance sheet.

Cash and cash equivalents

Cash and cash equivalents include certain highly liquid investments with
original maturities of three months or less.

Investments

Investments are carried at market value determined on the following bases:

(i)      Liquid investments such as cash, short-term government bonds and
         deposit certificates are valued at cost plus accrued interest.

(ii)     Investments having quoted market values on a recognized stock exchange
         are valued at the closing market price. Investments that are not listed
         on a recognized exchange but that are convertible or exchangeable into
         such an investment are valued based on the quoted market value of the
         investment into which they are exchangeable or convertible.

(iii)    Other investments are valued at management's estimate of market value.

(iv)     If an investment is denominated or quoted in a foreign currency its
         market value is converted to Canadian dollars at the mid-day Toronto
         exchange rate at the balance sheet date.

The difference between cost and market value has been recorded as an unrealized
gain or loss on investments and included in shareholders' equity on the
consolidated balance sheet.

Property and equipment

Property and equipment are stated at either cost or market value where
determinable. Cost represents the cost of acquisition, including the direct
costs of financing until the asset is ready for use.

Property and equipment are amortized over their estimated useful lives as
follows:

         Buildings                    straight line over 25 to 40 years
         Machinery and equipment      straight line over 4 to 20 years or 7% to
                                      12% on the diminishing balance basis
         Leasehold interests          straight line over the term of the lease
                                      ranging from 5 to 40 years

Liabilities

Liabilities for which there is a public market, other than the senior secured
notes (note 9), or which are associated with a recognized stock exchange are
recorded at the greater of principal amount plus accrued interest or equivalent
market value; or, the present value of all payments that management expects will
be made in respect of the liability. For liabilities that are exchangeable or


                                  Page 3 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


convertible, if management expects that investments will be delivered in
satisfaction of those rights, payments will include those investments at their
market values.

Liabilities include shares that are redeemable at the option of the holder other
than Common Shares.

With respect to the Corporation's Series II preference shares (as more fully
described in note 8), the liability is marked to market for fluctuations in the
market price of the shares of Class A Common Stock of International and foreign
exchange rates. The resulting gains or losses have been recorded as an
unrealized gain or loss on liabilities and included in shareholders' equity on
the balance sheet.

Derivative financial instruments

Derivative financial instruments include options, forward contracts and swaps
related to investments or to liabilities. These are valued based on management's
estimates of their asset value or liability value. Management is guided by
public market information in assessing these values where such information is
available. Any gain or loss is included in unrealized gain on investments, until
sold or cancelled.

Deferred financing costs

Deferred financing costs consist of certain costs incurred in connection with
debt financings. They are stated at cost and are amortized on a straight-line
basis over the term of the related debt being up to eight years.

Income taxes

Future income tax assets and liabilities are recognized for the future income
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Future income tax assets and liabilities are measured using enacted or
substantively enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered or settled. A
valuation allowance is recorded against any future income tax asset if it is
more likely than not that the asset value will not be realized.

Stock-based compensation and other stock-based payments

Effective January 1, 2004, the Company adopted Section 3870 of the CICA
Handbook, "Stock based Compensation and Other Stock-based Payments". This
standard requires the Company to recognize an expense in the financial
statements for all forms of employee stock-based compensation, including stock
options. The adoption of this new accounting principle did not have an impact on
the consolidated balance sheet.

Use of estimates

The preparation of this consolidated balance sheet requires the Corporation to
make estimates and judgments that affect the reported amounts of assets,
liabilities, and related disclosure of contingent assets and liabilities. On an
on-going basis, the Corporation evaluates its estimates, including those related
to bad debts, investments, income taxes, pensions and other post-retirement
benefits, and


                                  Page 4 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


contingencies and litigation. The Corporation relies on historical experience
and on various other assumptions that are believed to be reasonable under the
circumstances in making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.

Certain of the Company's investments and liabilities are valued at management's
estimate of market value. These fair value estimates are made at a specific
point in time, based on assumptions concerning amount and timing of estimated
future cash flows and assumed discount rates. The estimates are subjective in
nature and involve uncertainties and matters of significant judgment and
therefore may not accurately represent future realizable values.


2.  CHANGE IN ACCOUNTING PRESENTATION

As described in note 1 above, the Corporation is an open-end investment
corporation. Following accepted accounting practices for such corporations, the
Corporation has retroactively adopted "investment company" accounting practices.
The most significant results of this change in the basis of presentation are:

(a)  investments are carried at market value rather than on the basis of cost,
     equity or consolidation;

(b)  dividends from investees are recorded as investment income and unrealized
     gains and losses on investments are recorded in shareholders' equity as
     they occur, and realized gains and losses are credited directly to retained
     earnings, rather than recording such investments on an equity or
     consolidated basis;

(c)  liabilities, other than the senior secured notes, are recorded at their
     fair values, where determinable;

(d)  financial instruments other than the Common Shares are recorded entirely as
     liabilities rather than partly as liabilities and partly as equity; and

(e)  net unrealized gains and losses on assets and liabilities are included in
     shareholders' equity and realized gains and losses on assets and
     liabilities are credited directly to retained earnings.


                                  Page 5 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


3. RESTRICTED CASH

Restricted cash is comprised as follows:

<TABLE>
         <S>                                                           <C>
         Cash security under senior secured notes payable (note 9)     $13,243

         Cash security for directors' indemnities (note 12)                500
                                                                       --------
                                                                       $13,743
                                                                       ========
</TABLE>


On February 7, 2005, an additional $1,500,000 of cash was placed in trust, which
is intended to be used as additional security for directors' indemnities.


4. RELATED PARTIES

AMOUNTS DUE FROM AND TO RELATED PARTIES ARE COMPRISED AS FOLLOWS:


<TABLE>
         <S>                                                           <C>
         CURRENT AMOUNTS DUE FROM:
         The Ravelston Corporation Limited ("RCL"), a parent
         company (a)                                                   $14,374
         Ravelston Management Inc. ("RMI"), a company subject
         to common control (b)                                          57,393
         International and its subsidiaries                                 79
         Former director                                                   281
                                                                       -------
                                                                       $72,127
                                                                       =======

         AMOUNTS DUE TO:
         Former directors, under share unit plan                       $   556
         Lord Black (c)                                                 19,868
         International and its subsidiaries (d) and (e)                 33,030
         Companies controlled by former directors                          467
                                                                       -------
                                                                        53,921
         LESS CURRENT PORTION:                                          28,183
                                                                       -------
                                                                       $25,738
                                                                       =======
</TABLE>

(a)  This balance relates primarily to three loans made to RCL. The loans, in
     the principal amounts of $4,728,000, $4,803,000 and $5,175,000, were made
     to assist RMI in meeting its obligations to the Corporation under the
     Support Agreement and thereby assisting the Corporation in meeting its
     obligations under the Indentures (note 9). Each of the loans is supported
     by a demand promissory note bearing interest at the prime lending rate plus
     4% per annum, calculated and payable monthly and a general security
     agreement of RCL. The principal amounts of these loans and interest thereon
     remain outstanding.


                                  Page 6 of 20
<PAGE>


HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


(b)  This balance is due in connection with RMI's obligations under the Support
     Agreement (note 9). Amounts owing by RMI under the Support Agreement do not
     accrue interest and are unsecured obligations of RMI. RCL has
     unconditionally guaranteed RMI's obligations under the Contribution
     Agreement (note 9), with such guarantee supported by a pledge of RCL's
     shares of RMI.

     The Company has been informed by RMI that it may dispute all but
     approximately $4,100,000 of this receivable.

(c)  The Corporation had a joint obligation, pursuant to a judgment, to repay
     non-compete amounts of US$16,549,950 received by the Company in prior years
     plus interest. This amount is included as part of the receivable from RMI
     under the Support Agreement. Pursuant to an Order and Final Judgment of the
     Delaware Court of Chancery dated June 28, 2004 (the "Order"), the
     Corporation and Lord Black, the Corporation's controlling shareholder and
     former Chairman and Chief Executive Officer, were ordered to jointly pay to
     International the non-compete amounts plus interest. On July 16, 2004, the
     Company repaid to International US$5,964,000 and the balance was paid by
     Lord Black. The terms of the Company's obligation to make restitution to
     Lord Black, if any, have not been resolved. Until such determination is
     made, the balance sheet shows a payable to Lord Black. The Corporation is
     currently appealing the Order.

(d)  (i) This balance relates to an amended promissory note of the Company dated
     March 10, 2003 in the principal amount of US$20,349,000. The principal
     amount bears interest at a rate of 14.25% per annum if interest is paid in
     cash (and 16.50% per annum if paid in kind where certain conditions
     restrict payment of interest under the Corporation's senior secured notes)
     for an aggregate of $31,171,000 at September 30, 2004. Interest is payable
     quarterly and the principal is payable on demand after March 2, 2011. The
     reimbursement obligations under this note are to be secured by a cash
     collateral account that RCL was required to fund. The loan is guaranteed by
     RCL and secured by its receivables under RCL's management services
     agreement with CanWest Global Communications Corp. ("CanWest"). All amounts
     owing under the note are subordinated to the Corporation's senior secured
     notes for so long as the notes are outstanding (note 9).

     (ii) The remaining amount due to International of $1,859,000 is the result
     of prior shared business services.

(e)  The Company had an informal agreement with International whereby the
     Company would pay the costs of computer equipment and related products and
     services at the Company's offices in Toronto in 2002 and International
     would pay the costs in 2003. The Company and International were to
     reconcile the spending and share the combined costs equally. Based upon
     International's evaluation of the combined costs under this arrangement,
     the Company owed approximately $200,000 to International. This amount has
     not been agreed to by the Company but has been recorded. The Company has
     not yet paid its share of the costs incurred and continues to retain
     possession of the computer and related equipment it had acquired.


                                  Page 7 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


(f)  Included in accounts payable and accrued expenses on the consolidated
     balance sheet is approximately $6,500,000 with respect to legal fees
     incurred by Lord Black and F. David Radler, the Corporation's former
     President, the reimbursement of which is being sought from the Company
     under its indemnity of its directors and officers. The Company has not, at
     this time, agreed to reimburse these amounts.

RELATED PARTY CONTRACTUAL OBLIGATIONS:

(g)  The Company entered into a consulting agreement with Peter G. White
     Management Ltd. ("PGWML"), a company controlled by Peter G. White, a
     director and executive officer of the Corporation, effective December 23,
     2003, which provides that Mr. White renders various services to the
     Company. The agreement terminated on January 22, 2005 and was extended for
     a further six-month term to July 22, 2005. The agreement may be terminated
     on 30 days' notice. For its services under the agreement, PGWML receives
     $75,000 per month.

(h)  At 10 Toronto Street, RCL and RMI make use of the Company premises and
     currently pay no rent. The Company is in discussion with RCL and RMI with
     respect to a potential lease and related financial arrangements.

(i)  Certain employees of the Company provide services to RCL, RMI and Argus
     Corporation Limited, a parent company. As well, certain employees of RMI
     provide services to the Company. No re-allocation of these costs has been
     made to date. This is currently under review.

     All such employees were formerly employees of RMI. Employment contracts of
     these employees were transferred to the Company effective January 1, 2004.
     The employees retained all seniority, pension benefits and other
     entitlements earned while at RMI upon transfer. As a result, the Company
     has fully provided for the actuary's estimate of the pension obligation
     with respect to these employees in this consolidated balance sheet. No
     agreement with RCL and RMI as to the Company's and their legal obligations
     with respect to the RCL pension plan has been made to date.


                                  Page 8 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


5. INVESTMENTS

(i)  Investments having quoted market values

<TABLE>
<CAPTION>
                                                                 Number of
                                                                Shares/Units          Amount
                                                                ------------        -----------
     <S>                                                         <C>                 <C>
     International   Class A Shares (a) (note 8)                    792,560          $   17,352
                     Class B Shares (a) (note 9)                 14,990,000             328,186
                                                                 ----------          ----------
                                                                 15,782,560             345,538
                                                                 ==========
     Hollinger Canadian Newspapers, Limited Partnership
                              Units                                 150,000                 150
     </TABLE>


(ii)  Investments at estimated market values

<TABLE>
<CAPTION>
                                                                 Percentage
                                                                    held
                                                                ------------
     <S>                                                          <C>                <C>
     Cayman Free Press             Common shares                   39.993%                3,670
     Real estate division of
     Domgroup Ltd. ("DRE") (b)                      -                 100%               17,998
     Other                                          -                   -                   107
                                                                                     ----------
                                                                                     $  367,463
                                                                                     ==========
</TABLE>


(a)  International Class A and Class B Common Shares

     International's shares of Class A Common Stock ("International Class A
     Shares") and Class B Common Stock ("International Class B Shares") have
     identical rights with respect to cash dividends and in any sale or
     liquidation, but different voting rights. Each International Class A Share
     is entitled to one vote per share and each International Class B Share is
     entitled to ten votes per share on all matters, where the two classes vote
     together as a single class, including the election of International
     directors. International Class B Shares are convertible at any time at the
     option of the Company into International Class A Shares on a
     share-for-share basis and are transferable by the Company under certain
     conditions. Where the Company does not meet these conditions, and there is
     a change of control of International, the International Class B Shares are
     automatically converted on a share-for-share basis into International Class
     A Shares. The market value of the International Class B Shares, which do
     not trade, is stated at the closing market price of the International Class
     A Shares with no control premium taken into account.

(b)  DRE includes the Vancouver division of Domgroup Ltd. and all of the cash of
     Domgroup Ltd.



                                 Page 9 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


6. PROPERTY AND EQUIPMENT


<TABLE>
     <S>                                                        <C>
     Carried at cost
         Machinery, equipment and other                         $4,008
     Accumulated depreciation and amortization
         Machinery, equipment and other                          3,113
                                                                ------
                                                                   895
     Carried at market value
         Land and buildings                                      7,600
                                                                ------
     Net book value                                             $8,495
                                                                ======
</TABLE>



7.   INCOME TAXES

(a)  Current income tax liability

     Current income tax includes the estimated tax liability arising on the 2004
     retraction of Series II preference shares.

     A substantial portion of the current income tax liability, once paid, could
     be refundable to the Company upon payment of dividends or upon retraction
     or redemption of Common Shares or Series II preference shares including on
     a going private transaction.

(b)  Future income taxes

     The Company has operating losses carried forward for tax purposes of
     approximately $56,600,000, the tax benefit of which has been reflected in
     the consolidated balance sheet as a reduction of future income taxes. These
     losses expire as follows:

<TABLE>
                      <S>           <C>
                      2007          $ 3,000
                      2008              300
                      2009           11,700
                      2010           38,000
                      2011            3,600
                                    -------
                                    $56,600
                                    =======
</TABLE>


     The tax effects of temporary differences that give rise to significant
     portions of the future tax assets and future tax liabilities are presented
     below:


                                 Page 10 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


<TABLE>
     <S>                                                            <C>
     Future tax assets:
         Net operating loss carry forwards                          $23,434
         Compensation and accrued pension                               245
         Investments                                                  1,860
         Other                                                        4,304
                                                                    -------
     Gross future tax assets                                         29,843
     Less valuation allowance                                            --
                                                                    -------
     Net future tax assets                                           29,843
                                                                    -------
     Future tax liabilities:
         Property and equipment,
            principally due to differences in depreciation              306
         Investments                                                 67,669
         Other                                                        1,015
                                                                    -------
     Gross future tax liabilities                                    68,990
                                                                    -------
     Net future income tax liabilities                              $39,147
                                                                    =======
</TABLE>


Due to the Corporation's mutual fund corporation status for tax purposes, it is
possible that some or a large portion of the income taxes disclosed above could
be refundable.


8. RETRACTABLE PREFERENCE SHARES

The 1,722,951 outstanding Series II preference shares are exchangeable at the
holder's option for 0.46 of an International Class A Share held by the Company
for each Series II preference share for an aggregate of 792,560 International
Class A Shares. The Company has the option to make a cash payment of equivalent
value on the redemption of any of the Series II preference shares.

At September 30, 2004, a licensed trust company was holding 792,560
International Class A Shares held by the Company in support of exchange requests
made by holders of Series II preference shares from time to time. The Company
intends to honour any future retractions of its Series II preference shares with
these International Class A Shares.

9. LONG-TERM DEBT

At September 30, 2004, the Company had US$78,000,000 ($98,654,000) aggregate
principal amount of 11.875% senior secured notes due March 1, 2011 (the "Senior
Notes") and US$15,000,000 ($18,972,000) aggregate principal amount of 11.875%
senior secured notes due March 1, 2011 (the "Second Priority Notes" and,
together with the Senior Notes, the "Notes"). The Notes are carried at cost on
this consolidated balance sheet as they are not subject to redemption until
March 1, 2007, at which time a premium is to be paid on the redemption of any of
the Notes.

The Senior Notes are secured by a first priority lien on 14,990,000
International Class B Shares held by the Company plus $13,243,000 of cash
collateral. The cash collateral amount may be used


                                 Page 11 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


to satisfy future interest payment obligations on the outstanding Senior Notes.
The Senior Notes are fully and unconditionally guaranteed by RMI. The Second
Priority Notes are guaranteed by RMI and are secured by a second priority lien
on the collateral securing the Senior Notes.

Under the terms of the Indentures governing the Senior Notes and the Second
Priority Notes (collectively, the "Indentures"), the Company is subject to
certain financial covenants and other restrictions. As part of the terms of the
Notes, the Corporation was required to cause an exchange offer registration
statement to be declared effective with the United States Securities and
Exchange Commission (the "SEC") under the United States Securities Act of 1933,
as amended, within a certain period of time. The registration of the securities
is not being sought by the Corporation at this time. As a result of this
registration default, the annual interest rate of the Notes has increased up to
a maximum additional interest rate of one percent per annum over the 11 7/8%
interest rate until such time as the registration default is cured, whereupon
the interest rate will revert to the original level. As at September 30, 2004,
the Corporation was in compliance with all other covenants and other
restrictions in respect of the Senior Notes.

On March 10, 2003, the date the Corporation issued the Senior Notes, RMI entered
into a support agreement (the "Support Agreement") with the Corporation under
which RMI agreed to make annual support payments in cash to the Corporation on a
periodic basis by way of contributions to the capital of the Corporation
(without receiving any shares of the Corporation) or subordinated debt. The
Corporation, RMI and RCL also entered into a contribution agreement (the
"Contribution Agreement") in this regard. The amount of the annual support
payments is equal to the greater of: (a) the non-consolidated negative net cash
flow of the Corporation (which does not extend to outlays for retractions and
redemptions in respect of the share capital of the Corporation), or (b)
US$14,000,000 per year (less any future payments of services agreement fees
directly to the Company, and any excess in the net dividend amount received by
the Company on the shares of International that is over US$4,650,000 per year),
in either case, as reduced by any permanent repayment of debt owing by RCL to
the Corporation. The timing of payment of the annual support amount on a
quarterly basis is specifically defined in the Indentures to be within 45 days
after the first three quarters of the year and within 90 days of the last
quarter of the year. The Support Agreement terminates upon the repayment in full
of the Notes.

As a result of the Corporation's inability to file its statutory financial
statements as at and for the year ended December 31, 2003 and file its 2003 Form
20-F with the SEC, subsequent to June 30, 2004, the Corporation was not in
compliance with its obligations to deliver to relevant parties such filings
under the Indentures. This non-compliance led to the occurrence of an event of
default under the Indentures, however on September 30, 2004, the Corporation
sought and obtained a waiver with respect of this event of default. At such
time, the Corporation also sought and obtained a consent for a temporary
suspension of the Corporation's obligation under the Indentures to furnish to
relevant parties periodic and other reports under applicable U.S. federal
securities laws until January 1, 2006.


                                 Page 12 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


10. CAPITAL STOCK

<TABLE>
<S>                                                                <C>
     AUTHORIZED
     Unlimited number of retractable common shares
       and an unlimited number of preference shares
     Issued and fully paid
     PREFERENCE SHARES
       1,722,951 Series II shares                                  $     --
     RETRACTABLE COMMON SHARES
       34,945,776 shares                                            286,602
                                                                   --------
                                                                   $286,602
                                                                   ========
</TABLE>


(a)  The Common Shares have terms equivalent to common shares, except that they
     are retractable at any time by the holder for their retraction price, which
     is fixed from time to time, in exchange for International Class A Shares of
     equivalent value or, at the Corporation's option, cash. The retraction
     price determined each quarter (or, in certain specific cases more
     frequently) is between 90% and 100% of the Company's current value, being
     the aggregate fair market value of all of its assets less the aggregate of
     (i) the maximum amount payable at such date by the Corporation on its
     liquidation, dissolution or winding-up in respect of any outstanding
     preference shares, and (ii) its liabilities, including any tax liabilities
     that would arise on a sale by International of all or substantially all of
     its assets, which, in the opinion of the Board, would not be refundable at
     such date, divided by the number of Common Shares outstanding on such date.

(b)  There is continued uncertainty regarding the Corporation's future ability
     to complete retractions of the Common Shares and cash retractions of Series
     II preference shares. Dividends on the Series II preference shares are not
     payable until declared by the Board of Directors which will take into
     account when dividends are considered from time to time, among other
     things, the support payments to be made to the Corporation by RMI. Under
     applicable corporate law, the Corporation cannot redeem Common Shares or
     declare or pay dividends in certain circumstances, including if there are
     reasonable grounds for believing that the Company is, or would after such
     payment be, unable to pay its liabilities as they become due. In such
     circumstances, shareholders do not become creditors of the Corporation and
     remain as shareholders until such time as the retraction is able to be
     completed under applicable law. At present, the Corporation's uncertain
     ability to make payments on future retractions of Common Shares or
     dividends on Common Shares is because of the fact that liquidity of its
     assets is limited under the terms of the Notes. Substantially all of the
     Company's International shares were provided as security for the Notes
     limiting the liquidity of the Company's assets. As of February 25, 2005,
     there are retraction notices from holders of 395,665 Common Shares which
     are unable to be completed at the present time.

(c)  The Company has a stock option plan for its employees.



                                 Page 13 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


     Details of the Corporation's stock option plan are as follows:
     The Corporation has an Executive Share Option Plan, under which the
     Corporation may grant options to certain key executives of the Company, its
     subsidiaries or affiliated companies or its parent company, for up to
     5,560,000 Common Shares.

     These options give the holder the right to purchase, subject to the
     executive's entitlement to exercise, one Common Share for each option held.
     The options are exercisable to the extent of 25% thereof at the end of each
     of the first through fourth years following granting, on a cumulative
     basis. Options expire six years after the date of grant. Unexercised
     options expire one month following the date of termination of the
     executive's employment, except in the case of retirement at normal
     retirement age, death or certain offers made to all or substantially all of
     the holders of Common Shares, in which events, all unexercised options
     become exercisable in full.

     At September 30, 2004, there were 913,000 options outstanding having an
     exercise price of $13.72 per share and a remaining contractual life to
     December 8, 2004. All of the outstanding options at September 30, 2004
     expired unexercised on December 8, 2004.


11.  CONTINGENCIES AND COMMITMENTS

The Company has been named as defendant or co-defendant in a number of legal
actions. All claims made against the Company are being defended vigorously.
Except as otherwise stated, no provisions have been made for any potential
liability under these actions. Legal fees expected to be incurred with respect
to these actions total approximately $11,500,000. This amount has been accrued
in accounts payable and accrued expenses in this consolidated balance sheet. The
following actions have been taken against or by the Company:

(a)  The Company is named as a co-defendant in a complaint filed in the State of
     Illinois by International claiming damages and recovery for alleged
     breaches of fiduciary duty relating to management fees, sales and transfers
     of assets and non-competition and other payments made. International is
     seeking damages from all defendants of US$542,000,000 including
     pre-judgment interest of US$117,000,000. International is seeking to hold
     the Company jointly and severally liable for the full amount of the alleged
     damages under conspiracy and other theories. Repayment has been made of
     certain non-compete payments (see note 4).

(b)  The Company is named as a co-defendant in a number of class action suits in
     Canada and the United States that allege, among other things, securities
     fraud with respect to the use of management service fees to misappropriate
     funds from International, improper non-compete payments, inadequate Board
     oversight of executive pay, improper expenses and related party
     transactions.

(c)  International has named the Company as co-defendant in a suit seeking
     enforcement of a November 15, 2003 restructuring proposal to uphold a
     Shareholders' Rights Plan, a declaration that corporate by-laws were
     invalid and to prevent the closing of a certain transaction. The


                                 Page 14 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


     Company filed a counterclaim seeking to restrict the Shareholders' Rights
     Plan that International sought to adopt to prevent a certain transaction
     and claiming that the restructuring proposal was not negotiated in good
     faith and had been breached by International. A decision on International's
     claim was delivered on February 26, 2004 finding in favour of International
     which was confirmed on March 4, 2004 through a partial final judgment
     confirming the February 26, 2004 findings. Also on March 4, 2004, the
     Company filed a notice of appeal of the February 26, 2004 decision, which
     has not yet been decided. On May 19, 2004, the Court issued a decision on a
     summary judgment motion brought by International finding in favour of
     International and dismissing in large part the Company's counterclaims. The
     ruling also is on appeal.

(d)  International has named the Company as co-defendant in a suit seeking
     injunctive relief for the return of documents it claims ownership of and
     the assistance and co-operation of the defendants in recovering the
     documents and in having International and its auditors' access to the
     corporate headquarters of the Company. No examinations for discovery have
     been conducted to date. The parties negotiated and executed a Protocol
     dated March 25, 2004, providing for access and possession by International
     to the claimed records.

(e)  On September 3, 2004, Mr. Justice Colin Campbell of the Ontario Superior
     Court of Justice ordered (and on October 13, 2004 delivered his reasons
     for) the appointment of an Inspector of the affairs of the Company pursuant
     to section 229 of the Canada Business Corporations Act (the "Order") upon
     the application of Catalyst Fund General Partner I Inc. By further order
     (together with the Order, the "Orders") dated October 27, 2004, Ernst &
     Young Inc. was named as inspector and commenced its work (the "Inspection")
     soon thereafter. The Orders broadly require an investigation into the
     affairs of the Company and specifically into related party transactions,
     non-competition payments for the period January 1, 1997 to the present and
     the current status of the Company's audited financial statements for the
     year ended December 31, 2003. The Inspector has provided certain interim
     reports to the court, primarily outlining its need for more time to conduct
     its work. It is unclear as to whether ultimately the costs of the
     Inspection may be shared more broadly, but initial costs of the Inspection
     are being borne by the Company at a rate approaching $1,000,000 per month.
     The cost of the inspection is anticipated to total approximately
     $8,000,000. This amount has been accrued in addition to the legal fee
     accrual of $11,500,000 described above in accounts payable and accrued
     expenses in this consolidated balance sheet.

(f)  CanWest filed suit against the Company and others including International
     claiming damages under the agreement for the sale by International of
     certain Canadian newspapers in November 2000, including $22,500,000 for
     future losses relating to The National Post, $2,745,000 for capital and
     operating requirements and $752,000 for payment of newsprint rebates.
     International paid $26,500,000 million of principal plus interest with
     respect to the future losses relating to The National Post in November 2004
     in settlement of an August 2004 order.

     Exchange of documents and examinations for discovery in respect of the
     remaining two matters referred to above which have not yet been settled is
     expected to proceed in early 2005.


                                 Page 15 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


(g)  The Company was the guarantor under an aircraft lease that was prematurely
     terminated in January, 2004. The lessor has commenced an action against the
     Company for damages of approximately US$5,000,000.

(h)  On November 15, 2004, the SEC filed an action in the United Status District
     court for the Northern District of Illinois against Lord Black, F. David
     Radler and the Company seeking injunctive, monetary and other equitable
     relief.

     The SEC's allegations against the Company are as follows: (i) the Company
     made material misstatements and omissions in its responses to
     International's 1999 and 2000 proxy questionnaires and the Company's 2001
     Form 40-F filing and 2002 Form 2-F, Form 40-F and proxy statement filings
     with the SEC concerning US$16,500,000 million in payments it allegedly
     fraudulently received in connection with non-compete agreements associated
     with certain sales transactions; (ii) the Company allegedly knew or was
     reckless in not knowing that International's filings with the SEC were
     false and misleading because they failed to disclose the non-compete
     payments made to the Company; and (iii) the Company is liable for
     International's violations of certain federal securities laws during this
     period as a result of its alleged failure to properly disclose the
     non-compete payments it received.

     The SEC complaint seeks the following from the Company: (i) disgorgement of
     ill-gotten gains by the Company and unspecified civil penalties; (ii) a
     voting trust upon the shares of International held directly or indirectly
     by the Company; and (iii) an order enjoining the Company from further
     violations of the federal securities laws.

(i)  The affairs of the Company are presently under investigation by certain
     securities regulatory authorities. The appropriateness of certain
     transactions reported in previous financial statements as filed, of the
     financial statements themselves and the completeness of other regulatory
     filings are being questioned.

(j)  The Company is subject to litigation from time to time in the ordinary
     course of business. Although the amount of any liability with respect to
     any such litigation cannot be determined, in the opinion of management,
     such liability, if any, will not have a material adverse effect on the
     Company's financial condition.

(k)  The Company has incurred legal expense in the defence of various actions
     brought against it and others in both the United States and Canada. The
     Company has in turn advanced a claim against its directors' and officers'
     liability insurers asserting that, under the terms and conditions of the
     policies of insurance, these insurers are required to indemnify the Company
     in respect of this legal expense incurred in connection with some of the
     actions brought against the Company. The claims made total approximately
     $3,700,000, however, the actual amount of recovery is not determinable at
     the present time. The Company has not recorded any recovery with respect to
     these claims in this consolidated balance sheet.


                                 Page 16 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


12.  GUARANTEES

     Notes

     In connection with the issuance of the Senior Notes, the Corporation has
     agreed to indemnify the initial purchaser of the Senior Notes against any
     losses or damages resulting from inaccuracy of financial statements, taxes
     and compliance with securities legislation. The Corporation also
     indemnified the Senior Noteholders against any related tax liabilities
     arising from payments made with respect to the Senior Notes, except taxes
     on Senior Noteholder's income. These indemnifications generally extend for
     the term of the Senior Notes and do not provide for any limit on the
     maximum potential liability.

      The Corporation is unable to estimate the maximum potential liability for
      these types of indemnifications as the Indentures and related purchase
      agreement do not specify a maximum amount and the amounts are dependent
      upon future contingent events, the nature and likelihood of which cannot
      be determined at this time. No amount has been accrued in this
      consolidated balance sheet with respect to these indemnifications and the
      Corporation is unable to estimate amounts due for withholding taxes, if
      any, at this time. Any such amounts will increase the future effective
      cost of borrowing.

      Property Leases

      DRE has agreed to indemnify lessors of its operating leases against
      liabilities, damages, costs, claims and actions resulting from damaged
      property, violations of any lease covenants or any accident or injury
      occurring on the leased premises.

      The Company is unable to estimate the maximum exposure for these types of
      indemnifications as the operating leases do not specify a maximum amount
      and the amounts are dependent upon future contingent events, the nature
      and likelihood of which cannot be determined at this time. No amount with
      respect to these indemnifications has been considered in the determination
      of the market value of the Company's investment in DRE in this
      consolidated balance sheet.


      Dispositions

      In connection with certain dispositions of assets and/or businesses, the
      Company has provided customary representations and warranties whose terms
      range in duration and may not be explicitly defined. The Company has also
      retained certain liabilities for events occurring prior to sale, relating
      to tax, environmental, litigation and other matters. Generally, the
      Company has indemnified the purchasers in the event that a third party
      asserts a claim against the purchaser that relates to a liability retained
      by the Company. These types of indemnification guarantees typically extend
      for a number of years or in some cases extend indefinitely.

      The Company is unable to estimate the maximum potential liability for
      these indemnifications as the underlying agreements do not always specify
      a maximum amount and the amounts are dependent upon the outcome of future
      contingent events, the nature and likelihood of which cannot be determined
      at this time.



                                 Page 17 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


      Historically, the Company has not made any significant indemnification
      payments under such agreements and no amount has been accrued in this
      consolidated balance sheet with respect to these indemnification
      guarantees. The Company continues to monitor the conditions that are
      subject to guarantees and indemnifications to identify whether it is
      probable that a loss has occurred, and would recognize any such losses
      under any guarantees or indemnifications when those losses are probable
      and estimable.

      Directors

      The Corporation has entered into customary indemnification agreements in
      favour of its current and former directors. With respect to one current
      and one former director, the Corporation has entered into a trust and
      contribution agreement with a third party trustee and deposited in trust
      the amount of $500,000 to defend such directors from any claims made for
      which they would be entitled to indemnity pursuant to their
      indemnification agreements (see note 3). In February 2005, the Corporation
      placed an additional $1,500,000 of cash in trust which is intended to be
      used as additional security for directors' indemnities.

13.  SUBSEQUENT EVENTS

(a)  On October 28, 2004, the Corporation was advised that RCL intends to
     support a going private transaction involving the Corporation, structured
     as a consolidation of the outstanding Common Shares and Series II
     preference shares (the "Proposed Transaction"). The Board established a
     committee of independent directors to consider, evaluate and make a
     recommendation to it concerning the Proposed Transaction.

     On October 28, 2004, the Board approved the following transactions which
     would permit the Proposed Transaction to proceed and be considered by the
     shareholders of the Corporation and would provide the necessary financing
     to complete the Proposed Transaction:

     (i)   The Corporation received consents from holders of a majority in
           aggregate principal amount of its outstanding Notes approving
           amendments to the Indentures. The amendments permit, among other
           things, the retirement of all outstanding Common Shares (other than
           those held directly or indirectly by RCL) for cash pursuant to (i)
           the Proposed Transaction, (ii) retraction requests, and/or (iii)
           payments in respect of the due exercise of dissent rights of such
           shares in connection with the Proposed Transaction and the retirement
           of all outstanding Series II preference shares for International
           Class A Shares owned by the Company pursuant to the Proposed
           Transaction and/or payments in respect of the due exercise of dissent
           rights of such shares in connection with the Proposed Transaction.
           The amendments to the Indentures also permit the Corporation to incur
           additional indebtedness in an aggregate amount outstanding not to
           exceed US$40,000,000 through the issuance of Second Priority Notes.

           The amendments will become effective if, and only if, all necessary
           corporate and regulatory approvals in connection with the
           consolidation of the outstanding Common Shares (the "Common Share
           Approvals") have been obtained on or prior to March 31, 2005.


                                 Page 18 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


     (ii)  The Corporation received binding commitments for the issuance and
           sale of up to US$40,000,000 in aggregate principal amount of Second
           Priority Notes, such amount to be drawn down by the Corporation if,
           and only if, the Common Share Approvals have been obtained on or
           prior to March 31, 2005.

     (iii) The Corporation entered into a non-binding commitment with an arm's
           length lender with respect to bridge credit facilities with a term of
           12 months providing up to $16,000,000 in borrowings, which credit
           facilities may only be drawn down if, among other things, the Common
           Share Approvals have been obtained. If proceeded with, the Company
           would be providing security to the lender in support of the credit
           facilities, including first priority mortgages on certain real estate
           assets owned by the Company.

           On November 16, 2004, RCL indicated that it intends to support the
           Proposed Transaction on the basis of $7.25 in cash for each Common
           Share (other than the shares owned by it and certain of its
           affiliates) and 0.46 of an International Class A Share for each
           Series II preference share.

(b)  On November 2, 2004, Lord Black resigned his positions as Chairman, Chief
     Executive Officer and a director of the Corporation. On November 18, 2004,
     Mr. Justice Campbell of the Ontario Superior Court of Justice ordered the
     removal of three other related directors, F. David Radler, J.A. Boultbee
     and Barbara Amiel Black. The Board is now comprised of six directors.
     Gordon W. Walker was appointed as the initial Chairman of the Board and
     Donald M.J. Vale assumed the function of President.

(c)  On January 18, 2005, International filed its 2003 Form 10-K with the SEC,
     which included restated audited financial results for the fiscal years
     ended December 31, 1999 to 2002.

     The foregoing was a necessary but not sufficient condition to permit the
     Corporation to complete and file its 2003 annual consolidated financial
     statements as the completion and audit of such consolidated financial
     statements will require a level of co-operation from International, which
     is in negotiation, and International's auditors.

(d)  On January 18, 2005, International paid a special dividend on the
     International Class A Shares and the International Class B Shares, which
     resulted in approximately US$39,000,000 being received by the Company. As
     part of its settlement discussions with staff of the SEC relating to the
     action commenced by the SEC against the Company, Lord Black and F. David
     Radler in the U.S. District Court, Northern District of Illinois, the
     Company voluntarily agreed that it would enter into an arrangement whereby
     it would deposit such amount and, subject to any overriding rights of the
     holders of Notes, the amount of any subsequent distribution made by
     International, net of applicable withholding taxes, into an escrow account
     with a licensed trust company. The escrow will terminate upon the
     conclusion of the SEC action as to all parties. The escrow provides that
     the Company will have access to the escrowed funds for ordinary business
     and certain other enumerated purposes.


                                 Page 19 of 20
<PAGE>

HOLLINGER INC.
Notes to Consolidated Balance Sheet
September 30, 2004
(Tabular amounts are in thousands of dollars except where noted)
(unaudited)


(e)  On March 1, 2005, International paid a second special dividend on the
     International Class A Shares and the International Class B Shares. The
     total amount of this second special dividend received by the Company was
     approximately US$47,300,000. The net proceeds received are subject to the
     same escrow agreement referred to in (d) above.

(f)  On February 25, 2005, certain of the directors of the Corporation filed a
     motion in the Ontario Superior Court of Justice for, inter alia, advice and
     direction as to whether in the circumstances the Proposed Transaction
     should be put to the Corporation's shareholders before Ernst & Young Inc.
     delivers its final Inspection report. The motion also seeks an order
     approving an increase of $10,000,000 as additional security for directors'
     indemnities, confirmation of the deposit of $1,500,000 as additional
     security for directors' indemnities (note 3) and the establishment of an
     indemnification fund in favour of two financial executives of the
     Corporation with a deposit of $500,000. The motion further seeks an order
     approving payments to the directors of the Corporation (other than Mr.
     White) in the event of the termination of their tenure as directors and a
     retention bonus in the event that the Corporation continues as a public
     company after March 31, 2005, in each case, in an amount equal to a
     multiple of fees paid to such directors since November 18, 2004. The motion
     is scheduled to be heard on March 7, 2005.

     Materials filed with the court indicate that certain of the directors of
     the Corporation have been advised that the Corporation and its subsidiaries
     have claims against RCL and related corporations and individuals for in
     excess of $200,000,000 and that the Corporation should commence legal
     proceedings forthwith to enforce those claims. The directors have further
     been informed that RCL intends to strenuously resist any such claims.


                                 Page 20 of 20