Ospreys: Debts written off as chairman warns of 'challenges'
Ospreys made an operating loss of more than £2.7m in 2017-18, an "unsustainable" situation according to chairman Rob Davies.
The latest accounts up until 30 June, 2018 show a pre-tax profit of £1,85m, but only after £4,66m of debt had been written off and new capital introduced.
Davies was appointed in March 2019 after the aborted merger with Scarlets.
"There is no doubt we will continue to face challenges, however we can look forward to the future," he said.
Davies acknowledges that without the debts being written-off and the addition of extra funds, the finances could have been worse.
The report of the independent auditors also warned that the initial debt and liabilities were a major concern.
It stated: "The company incurred an operating loss of £2,706,799 during the period ended June 30, 2018 and as of that date the company's net current liabilities were £1,996,041 and shareholders funds were a deficit of £3,456,825.
"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."
In his report, Davies 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."
Davies took over as chairman after Mike James stepped down in protest after it was revealed the region had discussed joining with Scarlets.
That plan collapsed and Davies says the region are committed to working with Welsh rugby's Professional Rugby Board, which was set up to run the professional game in Wales.
The creating of the PRB as part of what became known as "Project Reset" and the financial restructuring of the game in Wales had been major factors leading to the region's financial benefactors, shareholders and directors of the Ospreys agreeing to the restructuring of the region's debts.
"It was needed to enable the creation of a more sustainable model for the rugby business," Davies added.