Michael Johnson, BPIF chief executive, said: "Operating income is going up, but we've had a huge hit because the number of people on training has declined markedly.

"We have been through a huge restructuring of our final salary scheme, and if you take all of our pension schemes, there is a loss. Other than these two areas, it's quite a rosy picture."

The full annual report will be presented at the BPIF's AGM on 6 July 2004.

The federation has also named former head of finance Carolyn Payne as finance and commercial director. Johnson said that Payne would be "hugely successful in helping me drive the business forward".

She replaces Mark Cooke, who is to join the Big Lottery Fund as director, finance and corporate services.