Last updated on .From the section Rugby Union

Peter Thomas had been chairman of Cardiff RFC and Cardiff Blues before stepping down this year

Cardiff Blues chairman Alun Jones has admitted the region's latest accounts "do not make pleasant reading".

The Blues' operating loss has risen to almost £1.3m in the latest set of accounts up until 30 June, 2018.

Former chairman Peter Thomas has written off £3.33m and converted more than £10m into equity.

In the annual report, Jones says the results do contain "some significant developments which bode well for the future".

Thomas officially stepped down as chairman on 1 January 2019 and was replaced by Jones.

The overall loss for the 2017-18 financial year would have been just under £2m compared to £1.45m in 2017.

But the £3.33m written off by Thomas and a further £933,708 by director Martyn Ryan produced what was termed as "exceptional income" of £4.27m.

This means the Blues did record an accounting profit for the financial year of £2.29m in a season where they were crowned Challenge Cup winners in May 2018.

The operating loss before interest, tax, depreciation and amortization was almost £1.3m compared to £976,000 in 2017.

Thomas has also converted more than £10m of his loans into equity or shares. So the overall Blues debt has been reduced from £15.75m in 2017 to £4.16m.

"The financial results for the 2018 year do not make pleasant reading but do contain some significant developments which bode well for the future," Jones wrote in the annual report.

"The company has undertaken a capital restructuring as part of the broader changes to the organisation of Welsh professional rugby.

"Our three benefactors Peter Thomas, Paul Bailey and Martyn Ryan have compromised on the company's financial obligations to them and have significantly reduced the amounts owed to them.

"This is an act of extraordinary generosity."

Peter Thomas and Cardiff Blues head coach John Mulvihill

Turnover has risen to £9.58m from £8.7m, while expenditure has risen to almost £11m from £9.93m.

Blues chief executive Richard Holland says talks are ongoing with their Arms Park landlords Cardiff Athletic Club about continuing to play at the ground.

"Dialogue with Cardiff Athletic Club continues to progress and while green shoots can not quite be seen yet there there is lots of positive activity going on just below the surface," wrote Holland.

In February 2018, the Blues said they were considering moving from their Arms Park home with no deal agreed past the current agreement that finishes in 2022.

The annual report also revealed the Blues were paying a lease of £412,661 at the Arms Park and almost £1.7m to the Vale of Glamorgan where their training facilities are based.