An increase in revenue of almost £7m has helped Watford FC make a small pre-tax profit for the year ending June 2013.

This helped the Hornets reduce their wages to revenue ratio from 90 to 70 per cent despite their overall salary costs going up almost £2.5m.

Watford Association Football Club Limited’s report and financial statements show it made a pre-tax profit of £190,000 compared to a pre-tax loss of £2.65m for the previous 12-month period.

The company made an operating loss of £2.07m but this was offset by profit on disposal of player registrations of £2.59m.

The operating loss of just over £2m is a considerable improvement on the £6.79m operating loss during the year ending June 30 2012, which was when the club changed ownership from Laurence Bassini to the Pozzo family.

Turnover has increased by £6.95m from £11.18m to £18.13m. Just under £2.58m of that sum was due to participation in the Championship Play-Offs and the rest was down to “improved commercial performance of the business”.

TV income for the year was £320,000 compared to £210,000 in 2012. Yet the Hornets’ exit from the FA Cup at the third round stage last season, compared to facing Tottenham Hotspur live on television in round four the previous year, means a £198,000 reduction in media income.

Media revenue as a whole, which includes the Premier League broadcasting agreements and Football League funding, reduced by £634,000 to £4.79m and that was mainly due to the League Award central distributions reducing by £612,000 - which was due to the fallout from Laurence Basssini’s reign.

Commercial revenue was up by £6.09m. Featuring in the play-offs and improved ‘general’ commercial income resulted in an increase of £6.26m and retail was £185,000 better off.

There was a £357,000 reduction in catering revenue due to the club outsourcing their operation to Lindley. It used to be in-house and the profits would be offset by cost of sales and money spent on administration. Now the Golden Boys receive an amount from Lindley each year depending on turnover and the club have effectively removed catering costs from the business.

So match-day catering revenue was down £455,000 but there was a £690,000 reduction in costs.

Catering salaries reduced by £113,000 but salary costs as a whole increased by £2.48m to £12.83m.

The players’ salaries were up by £1.43m to £8.56m and other football related salaries increased by £853,000 to £2.35m.

The total wage bill for the year ending June 2013 was £11.35m whereas it was £8.85m during the previous 12-month period.

The decision to ‘restructure’ the football and office staff following the Pozzo takeover also cost the club £703,000.

In terms of the number of personnel, Watford had 60 players in June compared to 49 the summer before and increased the full-time coaching staff by seven to 37.

However, the increase in revenue as a whole meant the wages to revenue ratio reduced to 70 per cent during the year ending June 2013.

Overall income on a match day was up by £1.49m, largely due to the £2.58m play-off money.

Season ticket income was up £59,000 and league match revenue increased by £199,000. Cup match day income was up £70,000.

Saracens only playing three matches at Vicarage Road last season, compared to nine in the previous campaign, contributed to other operating income dropping £209,000 to £435,000. That reduction also included invoices in previous years which the club now deem unrecoverable. It appears Saracens paid £260,000 to play the trio of matches at the Golden Boys’ ground.

Watford’s new ten-year agreement with University College of London is worth £488,500 per year.

The Pozzos’ company Hornets Investment Limited have loaned the club £2.99m but it is interest free, unsecured and the parent company will not seek repayment as it would “jeopardise” the club’s ability to continue as a going concern.

A £5.98m sum ‘due’ to Hornets Investment Ltd was repaid during the last financial year by assigning loan notes owed to the company. It was an issue relating to the sale of the club.

Non-executive director and Watford fan David Fransen is still owed £250,000 in an unsecured loan, which attracts interest at 3.5 per cent above Barclays base rate.

Fransen’s £250,000 loan and ‘other loans’ worth £305,000 - which includes a £229,815 secured bond - is due to be paid before next summer.

Other loans worth £5.75m in the shape of secured bond, primarily owed to Lord Ashcroft, are due in more than one year. However, the club have previously stated the bondholders are now viewed more as ‘partners’ and that the money will be repaid when the club is promoted.

In total, the financial statements say the club owes £550,000 before next summer, £669,000 the following year, £232,000 in between two and five years time and £8.5m in more than five years. It means a total of £9.96m in loans are due for repayment.

Barclays has indicated it will continue to make the £1m overdraft facility available as long as the club operates within the current financial plan.

As is usually the case with football clubs, the auditor - in this instance Paul Windmill of Myers Clark - said there was the “existence of a material uncertainty which may cast significant doubt about the company’s ability to continue as a going concern” with its liabilities at the end of June exceeding its total assets by £3.77m.

The Golden Boys’ board of directors consist of executive chairman Raffaele Riva, CEO Scott Duxbury and technical director Gian Luca Nani (the latter both executive directors). Fransen and Stuart Timperley are non-executive directors.

The financial statements show the directors’ remuneration for the year ending was £400,000 - compared to £23,000 in 2012. Riva, Fransen and Timperley did not receive any remuneration as their role at the club is minimal and it is Duxbury and Nani who run the club on a day-to-day basis.

The accounts show the highest paid director received £240,000, which we understand is Nani.

Watford legends Sir Elton John and Graham Taylor remain honorary life presidents.

Speaking on behalf of the directors in the annual report, company secretary Peter Wastall said: “The board acknowledges the challenges which are currently evident, particularly with regard to funding issues, stadium development and club promotion.

“The chairman and directors wish to express their thanks and gratitude for the commitment and sustained endeavours of the manager, the team and all football and office staff and additionally to all the club’s supporters, and trust that the club will enjoy sustained and significant progress during the coming year and beyond.”