Civilian Content, the UK media concern which owns National Lottery franchise The Film Consortium, on Thursday posted a group loss before tax of $7.6m (£5.2m) for last year.

The AIM-listed company, which has $20m (£13.6m) left of the Consortium's original lottery grant of some $44.1m (£30m), recorded a total operating loss of $2.5m (£1.7m) and a exceptional loss on discontinued operations of $5.3m (£3.6m).

Civilian estimated that its cost base was reduced by around $1.5m (£1m) after slashing back development and production operations. The company now focuses on sales-led films, boarding third-party titles rather than investing in development and production in-house. The restructuring saw the closure of Norma Heyman's Pagoda Film and Television Limited and Hilary Heath's Blackjack Productions.

Civilian said it would continue its strategy of backing internationally-oriented productions rather than low-budget UK fare, a policy led by Chris Auty, who ousted Richard Holmes as managing director last year. While Civilian's sales arm The Works had strong sales with the low-budget UK soccer comedy Bend It Like Beckham, Civilian cited the failure of other small-scale local titles that it had backed such as Room To Rent and Gabriel And Me to make a box-office impact.

The company said that another of its locally-made films, Michael Winterbottom's 24 Hour Party People, disappointed at the UK box-office with $1.5m (£1m). International sales would be "correspondingly disappointing".

"The sales performance of Bend It Like Beckham, which significantly exceeded our expectations, is exceptional," the company said. "However, 24 Hour Party People and Dr Sleep have achieved lower returns than expected, and this is likely to affect the full year outcome for 2002."

Civilian chairman David Elstein said that the company's outlook for the year, "although improved, remains uncertain due to continuing adverse market conditions". The group operating loss on continuing operations was reduced to $1.3m (£0.85m), compared to a $3.1m (£2.1m) operating loss the year before. Turnover increased to $19.6m (£13.3m), up from $5.9m (£4m) for 2000.

"2001 was a difficult but transforming year for Civilian Content," Elstein said. "We have responded swiftly to the realities of the film marketplace, and have reassessed aggressively the structure and costs of the group going forward...We are now confident that we have created the basis for profitable operations."