Watford FC’s inability to reach the Championship play-offs last season was a major reason the club made a pre-tax loss of £344,000 for the year ending June 2014.

Watford Association Football Club Limited’s report and financial statements show the company made a small loss compared to the £190,000 profit for the previous year.

That, in part, was due to the club not participating in the Championship play-offs last season - which earned Watford £2.76m in 2013.

As a result, the Hornets’ turnover for the last tax year reduced by £1.44m to £16.69m.

However, if you remove the play-off money from the equation, Watford’s turnover in other areas of the business is up £1.13m Watford’s operating loss decreased by £646,000 to £1.42m, which was helped by a profit on player disposals for the year of £1.51m. The club have also reduced their wage and salary costs by £929,000 to £11.89m. The cost of players’ overall salaries dropped due to lower playing bonuses being paid after last season’s 13th-place finish, whilst the Pozzos spent £703,000 during the accounts for the year ending 2013 restructuring the football and office staff following the family’s takeover.

Media revenue, which includes the Premier League broadcasting agreements and Football League funding, fell by £20,000. That was because of reduced TV income, down £160,000 from 2013, and a decrease of the League Award central distributions of £61,000.

Those reductions were offset by an increase of Premier League solidarity payments of £129,000 and an FA Cup progression payment of £67,000.

But not reaching the play-offs also impacted Watford’s commercial revenue, dropping by £579,000 to a total of £7.17m. The 2013 play-offs landed the Hornets £1m in commercial revenue. If that is discounted from the 2014 figures, there is an improvement of £421,000. That increase includes £257,000 from club partnerships and advertising, a further £191,000 from increased retail revenue and £16,000 from events.

The catering revenue fell by £43,000 but that was outsourced after 2013. The loss is offset by Watford no longer operating in-house catering.

Match-day revenue has fallen by £1m but again the play-offs boosted the 2013 figure to £5.59m as the Hornets received £1.57m for their participation in the end-of-season competition.

So there is a comparable increase of £571,000 due to an improvement in season and match ticket income (£306,000) and matchday commercial sales (£160,000). Several home cup ties boosted revenue by a further £125,000.

The club’s other operating expenses were reduced by £213,000 to £6.95m after the catering was outsourced and play-off costs of £416,000 were not incurred. However, those reductions were offset in expenses on legal and other professional services increase to £235,000, which mainly relates to the court case with finance company LNOC.

Operating income rose to £988,000, largely thanks to contributions from bondholders in relation to the LNOC case, whilst money raised by player sales - including Britt Assombalonga, Jonathan Hogg and Craig Forsyth - totalled £1.51m. The number of players on Watford’s books dropped by eight down to 52 for the year ending June 2014 whilst the average monthly number of people employed by the company fell by six to 158.

Total staff wages and salaries decreased to £11.89m.

The loan owed by Watford to parent company Hornets Investment Limited increased to £5.63m, largely due to two loans provided for the building of the East Stand. The first is a £1m loan, with 4.5 per cent interest per year, repayable on September 30, 2015. The second £1.75m loan is repayable in five equal instalments commencing on December 31 next year, interest is again accrued at 4.5 per cent per annum. The rest of the loan is unsecured, carries no interest and has no fixed repayment date.

As of June 2014, Watford had loan notes of £1.59m owed to David Fransen. Non-executive director, and Hornets fan, Fransen is still owed £250,000 in an unsecured loan, which attracts interest at 3.5 per cent above Barclays Bank base rate. Other loans represent £5.75m in secured bonds - primarily owed to Lord Ashcroft – which, as was the case in 2013, are due after more than one year.

In total, Watford’s financial statements show the Hornets owe £1.22m before next summer, £1.35m the following year, £2.28m in between two and five years time and £7.741m in more than five years. The club have a total of £12.59m in loans that are due for repayment, a rise from £9.96m in 2013.

We understand a number of signings from sister clubs Udinese and Granada joined Watford for minimal or no initial transfer fees but that sums will be paid depending on promotion, which the accounts appear to indicate. The accounts reveal transfer agreements are in place, to the sum of £8.11m, which are linked to Watford sealing promotion to the Premier League or making international appearances. The maximum that could be payable for transfers made before June 30, 2014, is £8.53m. Since the tax year end, none of that amount had become payable.

The financial statements show the directors’ remuneration for the year ending was £350,000 compared to £400,000 in 2013. The accounts show the highest paid director received £190,000.

As was the case last year, the auditor - Paul Windmill of Myers Clark – once again 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 £4.11m.

Raffaele Riva remains the club’s executive chairman, although he has very little to do with the club. The CEO Scott Duxbury runs the Hornets on a day-to-day basis alongside owner Gino Pozzo and is executive director, whilst Gian Luca Nani is listed as an executive director and technical director, but resigned from his post on September 2.

Fransen and Stuart Timperley continue as non-executive directors whilst Watford legends Sir Elton John and Graham Taylor remain honorary life presidents.