Watford made a pre-tax loss of £4m for the year despite cutting more than £4m off their overall wage bill.

The Hornets’ parent company Watford Leisure Plc released its final results for the year ending June 30 this morning and provided a clear indication of the tough task the club have faced since their Premier League parachute payments ended last summer.

Watford’s revenue dropped by almost £12m following the loss of £11m broadcast revenue but the parent company’s final results do show positive steps have been taken in reducing the club’s expenditure across the board.

However, more still needs to be done and the Watford Leisure statement reiterated the Hornets will need to sell players or rely on shareholders’ support until a new investor is found.

The final results read: “The group has prepared detailed cash flow forecasts for the period to 30 June 2015. Those forecasts show that the group and company do not currently have facilities in place to fund all of the projected cash requirements over the next 12-month period.

“The directors acknowledge that as a football club which invests significantly in its youth and recruitment policies, the trading of players is critical to the business model of the company.

“The directors are confident that through a combination of player sales and directors and/or shareholder support the requirement to 30 June 2011 will be satisfied.”

Revenue for the year ending June 30 was down to £11.26m compared to £23.08m during the previous 12-month period but the club managed to limit the pre-tax loss to £4.06m.

The operating loss before interest, player trading, amortisation and exceptional items was £7.42m but there were plenty of positives to come from the final results.

Total salaries have reduced from £14.997m in 2009 to £10.876m in 2010, with £2.74m being slashed off the players’ wage bill, which in June was £7.76m. The wages to revenue ratio for the year was still a startling 99 per cent, compared to 68 per cent in 2009, but it does not account for this summer’s changes, which include the departures of high earners such as Will Hoskins, Jay DeMerit and Jon Harley. Football management, commercial, stadium and administrative salaries have been reduced by £1.38m.

Cost savings of £1.07m were made within the football side of the club and £582,000 in the stadium and administrative areas. Retail and catering costs have also fallen by £553,000.

The sale of players like Tommy Smith, Mike Williamson and Tamas Priskin contributed to £4.11m total profits on the disposal of players' registrations. This also had an impact on the amortisation and impairment costs, which have reduced from £4.29m to £1.37m.

But for all the positives, the impact from the Premier League parachute payments ending is clear to see.

Media revenue fell by £10.41m after the club stopped receiving £11.31m from the Premier League. The League Basic Award increased from £1.18m to £2.53m but the Hornets received just £993,000 from the Premier League in 2010, compared to £12.3m in 2009.

Commercial revenues, matchday revenues and catering revenues all reduced by £282,000, £556,000 and £372,000 respectively.

One of the most pressing issues for Watford though is the fact their total liabilities are up to £18.53m from £13.7m in 2009, due to the club’s need to borrow money from former chairman Jimmy Russo and subsequently major shareholder Lord Michael Ashcroft.

The pending bond issue, which expires this summer, has increased the current liabilities from £10.7m in 2009 to £17.18m.

Watford are confident Lord Ashcroft, director David Fransen and former chairman Graham Simpson would be willing to extend the bond issue should they fail to find a new investor before this summer.

However, the statement read: “The directors consider that new investment into the business is absolutely vital in order to allow the group to move forward from what has been a difficult time financially. The directors will continue to manage the group’s resources and seek to increase income and control costs at all times.

“These financial statements show the dramatic cost reductions that have already been made to ensure that the impact of the loss of £12m of revenue has been minimised and the current period will show further reductions as many players’ contracts expired and new contracts were signed with costs fitting within the business structure necessary to enable sustainability.

“The directors are confident that the going concern basis is appropriate, and believe that new investment will be forthcoming in the period required and that otherwise bond holder support will enable the group more time to secure such investment.”

The annual report and financial statements should be released on November 15 and the company’s annual general meeting will be held on December 13 at Vicarage Road.

Click here for the final results in full