The Whites' parent company, Burnden Leisure, has recouped a considerable amount from the transfers of Gary Cahill, Ali Al Habsi and Matt Taylor but a heavy reduction in television revenue and gate receipts has taken its toll.
Owner Eddie Davies has moved to re-finance monies owed to him by the club into a long-term loan allowing them to repay the figure over a period of between two and 10 years.
Commenting on the figures, chairman Phil Gartside said: "We continue to face a tough economic climate, but we have continued to invest across the business, and for the second year we have reduced our losses.
"Key to this set of figures is the fact Eddie Davies has converted his investment in our club from short-term to long-term debt.
"It is a huge vote of confidence and underlines the on-going support and commitment he has for our club."