Everton are preparing to announce the biggest losses in their history and will hand Carlo Ancelotti a smaller immediate transfer budget than Marco Silva’s ill-fated splurge in the summer.

Ancelotti will be assured funds remain available to bring in key players, with Juventus centre-back Merih Demiral high on the Italian’s wish list. However, the club will closely regulate spending for the current window and have plans to offload a host of fringe squad members.

Sources close to the club confirmed record losses would be released within days for last season, but maintained they were not at risk of breaching financial fair play rules and long-term investment in the squad and the club’s new stadium would not be affected.

The latest annual report, delayed from its normal December publishing date, will lay bare at the shareholders’ annual meeting this month how the gulf with close neighbours Liverpool has widened again.

While Sunday’s FA Cup third-round opponents broke the world record for the biggest pre-tax profit made by a football club during the 2017-18 financial year, Everton have suffered huge deficits – spending an estimated £450 million on players since Farhad Moshiri bought a 49.9 per cent stake in the club in February 2016.