The Ospreys have revealed the action they have had to take to address an “unsustainable” financial situation after incurring an operating loss of more than £2.7m in 2017-18.
That has seen £4.66m of historic debt being written off and new capital introduced into the business to produce a pre-tax profit of £1.85m.
The figures are revealed in the latest accounts up until June 30, 2018, at which point the company’s net current liabilities were £1,996,041 and shareholders funds were a deficit of £3,456,825.
The independent auditors express their concern over this state of affairs in their report.
It stated: “These events or conditions... indicate that a material uncertainty exists that may cast doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”
However, chairman Robert Davies insists that there is reason for optimism based on the changes that have been put in place.
Davies took over from Mike James in March 2019 in the wake of the aborted merger with the Scarlets.
In his report, he said: “There is no disguising the fact that accounts for 2017-18 tell a now familiar story, one that has been told across all four regions over the past few years; significant annual trading losses in order to try and maintain a competitive squad.
“Continuing to operate on this basis would clearly be unsustainable for the Ospreys or any other region in Wales.
“In the case of the Ospreys, the 2017-18 trading position was further exacerbated by a number of one-offs, including costs associated with changing the head coach.
“It has been clear for some time that a change of outlook and core funding was needed across Welsh professional rugby as a whole which is why all four regions and the WRU have come together to look to the future organisation and management of the professional game in Wales.
“This had led to what became known as Project Reset and resulted in the formal creation of the new Professional Rugby Board (PRB) to oversee the game.”
He continued: “As a result of the commitment to these radical and positive changes, the benefactors, shareholders and directors of Ospreys Rugby agreed to a necessary financial restructuring of the business and the introduction of additional funds.
“It was needed to enable the creation of a more sustainable model for the rugby business, securing a long term future for Ospreys Rugby as a standalone rugby organisation.
“Despite going through a difficult period, the introduction of new capital directly into Osprey Rugby, together with the write-off of certain historic debt, enabled us to report a pre-tax profit for the year of £1.85m.
“There is no doubt that going forward we will continue to face challenges on and off the field.
“However we can look to the future with real optimism.
“The recent introduction of new directors and advisors to our board has brought with it a fresh impetus, adding new skills and experience to allow us to get to grips with the challenges we face.
“There is an air of excitement and real momentum across our organisation that has been galvanised by the recent challenges.”
