Guardian Media Group posts £76.6m pre-tax loss

The Guardian’s parent company Guardian Media Group has reported pre-tax losses of £75.6m in the last financial year.

GMG said the loss, which contrasts with pre-tax profits of £9m in 2011, was down to an exceptional charge relating to the sell-off of its subsidiary GMG Radio.

The company’s annual report published today, covering the year to March 2012, also revealed that the combined value of its cash balance and investment fund has risen from £197.4m to £225.8m, reflecting dividends from its shares in Trader Media Group (TMG).

Revenue was down slightly at £254.4m (2011: £255.1m) and the company recorded operating losses before exceptional items of £64.4m, up from £54.5m in 2011.

Chief executive Andrew Miller said: “It is to be expected that as we invest in the future of the Guardian, we will see some increase in GMG’s losses.

“Overall, our portfolio of assets performed well, although a non-cash impairment in the value of our radio business had a negative impact on the Group’s pre-tax loss figure.

“The view of the Board is that the ongoing value of our assets is more than sufficient to see us through this period of change.”

Today’s report said GMG was now targeting cost savings of at least £25m over the course of the five-year plan announced in 2011.

“This will be a tough and sometimes painful challenge,” said Miller, adding: “I would like to thank staff for their continued understanding and commitment as we go through these difficult times.

“It is vital that we succeed if we are to be able to fully implement our strategy of investing in digital through continued product growth.

“It is only by achieving the necessary levels of cost savings that we can provide the headroom to fund our digital future.”

Elsewhere, digital revenues for the year grew by 16.3 per cent to £45.7m, which the company said “largely off sets the decline in print revenues”.

Despite announcing its “digital-first” strategy last year, Miller said that this "in no way detracts from our love of printed newspapers or our desire to see them flourish".

Operating profit at Trader Media Group – a joint venture with Apax Partners – grew to £128.7m, up from £118.6m in 2011, with 83% of revenues now coming from digital.

GMG’s second joint venture with Apax Partners, Top Right Group (formerly known as Emap), returned to profit growth. Underlying operating profit was £78.7m compared with £76.3m in 2011.

Dame Amelia Fawcett DBE, chair of GMG, said: “At Guardian Media Group (GMG), securing a sustainable future for quality journalism has been our number one priority during the last year.

“It is, by any measure, a stretching task. Media organisations across the world are struggling to match growth in digital audiences with growth in digital revenues."

She added: “The increase in GNM’s operating loss is in line with our projections and reflects planned investments. These critical investments have been made possible through the headroom provided by large-scale savings.

“This gives us great confidence that GNM will meet its target of reducing losses to a sustainable level over a five year period.

“Achieving this goal will require a huge collective effort from everyone across the whole of GMG. Difficult decisions will need to be made and major changes implemented.

“The next few years will be very challenging and we will need to be ready to revise our plans should economic and market conditions worsen.

“The prize is a secure future for the Guardian’s journalism, and there can be no better illustration of how important that is than the extraordinary editorial achievements of the past year.

“Our journalistic output has never been better or as widely consumed, something of which everyone across the Group can be proud."

Last month, Guardian News and Media reported a 15 per cent rise in operating losses to £44.2m for the year to March 2012.

Revenue is understood to have fallen slightly to £196.2m from £198.2m in 2010/2011.

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