The pro-Remain Guardian was given a significant financial boost by a collapse in the value of the pound following the UK’s vote to leave the European Union in June 2016.
The value of Guardian Media Group’s overseas investments have soared over the last year. This helped add some £129m to the £765m which sat in its investment fund at the end of the last financial year (which runs to the end of March).
In the 2015/2016 financial year the fund went down in value by £23.8m.
The growth was said to be evenly split between positive foreign currency effects (thanks to the fall in the pound) and investment performance (which which will have been helped by strong post Brexit-vote growth in the UK stock exchange).
The Guardian’s investments are said to be split between “global and emerging markets equity, fixed income, hedge funds and private equity and venture capital funds”.
The Guardian’s endowment fund now stands at £1,038.8m thanks to a further £239m from the sale of GMG’s stake in Ascential. Only £145m of that windfall appears to have made its way into the GMG piggybank, with the rest presumably being used to cover losses.
The Ascential share sale represents the final part of GMG’s sell-off of the ‘family silver’. In 2014 it made £600m from selling its other major investment, in car sales business Trader Media Group.
Guardian Media Group and Apax partners bought Emap for around £1bn in 2007 and have trodden a long road to get their money back after the financial collapse of 2007. Since then Emap has changed its name to Top Right Group and then Ascential.
The investment appears to have worked with the debt to finance the purchase now paid off. GMG has received other dividends and profit shares along the way from Emap/Top Right Group/Ascential.
Today’s financial news appears to leave GMG in a stronger position than it was a year ago, and its owner The Scott Trust is better placed to protect the journalism of The Guardian “in perpetuity” as per its remit.
But with cash outflow for the last financial year of £67.3m The Guardian is only safe for 15 years at the current rate of burn.
Negative currency fluctuations and falls in the value of its investments could reduce this fugure, meaning more cost-savings are going to be needed as well as further growth in the membership base if The Guardian is to secure its long-term future.