Chelsea yesterday insisted they were "well-positioned" to meet forthcoming Uefa rules that require clubs to operate close to break-even, despite announcing increased annual losses of more than £70m.

The former chief executive, Peter Kenyon, had said as recently as 2008 that the club remained "determined" to reach operating break-even by 2009-10.

But the summary of the club's accounts, released on the day Chelsea spent more than £70m on Fernando Torres and David Luiz, revealed that in the year to the end of April 2010 operating losses stood at £68.6m.

The total loss of £70.9m was a substantial increase on the previous year's total of £44.4m, a reduction on the previous year aided by the banking of transfer fees for Wayne Bridge, Glen Johnson and Steve Sidwell.

The chief executive, Ron Gourlay, attempted to put a positive spin on the figures, arguing that increased turnover (up £2.5m to £205.8m) and a £3.6m reduction in operating loss from the previous year proved the club was moving in the right direction.

"The reduction in operating losses and increased sales in 2009-10 shows that we are moving in the right direction especially when viewed against the difficult macroeconomic environment," he said. "The club is in a strong position to meet the challenges of Uefa financial fair play initiatives which will be relevant to the financial statements to be released in early 2013."

Despite winning the domestic double last season, and reining in transfer spending in comparison with previous seasons, the club appears a long way from meeting Uefa's financial fair play criteria, which will require clubs to break even on all football activities. With an ageing squad, nor is there much resale value in many of their big names.

But Chelsea are confident that next year's figures will show that they are moving in the right direction, because they will show the impact of last summer's rationalisation of the squad and recent moves to cut costs.

The sale or release of Joe Cole, Deco, Ricardo Carvalho, Michael Ballack and Juliano Belletti is estimated to have brought in around £15m in transfer fees and saved £20m a year in wages.

Even once the impact of the Torres fee and wages are absorbed, there is confidence that improved revenues from ticket price increases, reduced bonus payments for players, a renegotiated deal with Adidas and more money from new Champions League and Premier League TV deals will more than mitigate the impact. The club is also continuing to search for a buyer for the naming rights for Stamford Bridge.

Like all transfer expenditure, the Torres fee will be amortised over the course of his contract.

Under the new Uefa financial fair play rules, clubs must pledge to break even on all football activities, subject to a sliding scale of acceptable losses that can be covered by a club's owner.

In the first two years that will be analysed by Uefa's team of accountants – 2011-12 and 2012-13 – clubs will be permitted to overspend by a total of €45m (£37.4m) as long as that figure is cancelled out by an equity injection from the owner.

Over the following three seasons, the permitted losses will again be set at €45m over the entire period. That will then drop to €30m over three seasons, then €15m, then zero.

Once a club, which will be investigated in detail if it exhibits one of a number of warning signs, fails the test the case will pass to a new panel set up to decide on sanctions.

But there are crucial caveats. If clubs can show that they are travelling in the right direction, that their losses are reducing year on year and can point to them being a result of contracts signed before June 2010 when the rules were enshrined in Uefa's rulebook, that may reduce the sanction.

Chelsea's chairman, Bruce Buck, said: "That the club was cash generative in the year when we recorded a historic FAPL and FA Cup double is a great encouragement and demonstrates significant progress as regards our financial results."

Gourlay has previously conceded that the club would not meet his predecessor's break-even target. In February 2008, Kenyon had said: "Our long-term target of operating profit break even by 2009-10 remains ambitious but we are determined to meet it or get as close as we can."

Manchester City's most recent accounts showed they made losses of £121m in 2009-10. At Manchester United, operating profits topped £100m for the first time but the club was left in the red by £79.6m due to interest payments on its £521.7m debt and one-off losses on interest rate swaps.