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LIVERPOOL FC's debts rose by almost £22m to £87.2m, the club’s latest set of accounts released today show.

But Anfield directors insist the cost of squad rebuilding in a period without any European football at all played a big part in the £21.8m net increase.

Read More: LFC Cup success helped offset lack of European football

Significant instalments due on the previous transfers of Stewart Downing and Jordan Henderson – plus paying off under-achieving players in order to get them off the books – are also part of the reason for the rise.

The full Liverpool FC accounts document is at the end of this story

The club insist fans should not be worried by the rise in debt and highlight an interest free £46.8m intercompany loan, since made by American owners FSG, as evidence of an ongoing commitment to return the club to full health both on and off the field.

That FSG loan has now seen the debt figure being reported today reduced. Liverpool also point to still growing commercial revenues and the club’s continued position in the Deloitte list of top ten European clubs as reasons for optimism over the future.

Liverpool were the only side not in the Champions League (they were not even in the Europa League) at the time to make Deloitte’s prestigious money league shortlist.

The record-breaking Warrior kit deal – worth £25m a year to Anfield over six years – is not included in the financial snapshot just lodged with Companies House.

* LFC accounts - Anfield expansion plans still on track

The accounts, for the period August 1, 2011 to May 31, 2012, show that while debts rose, Liverpool’s annual loss before tax reduced from £49.3m to £40.5m.

Liverpool Managing Director Ian Ayre today told the Echo: “The key message for me is that we are continuing to transition to the point we have been working on for several years under this ownership – which is to continue to improve revenues and manage our cost base effectively.

“The biggest cost base without doubt is player trading and player wages – but these accounts demonstrate that we are still working hard to improve that.”

He added: “Nobody in a position of authority would say it is a good set of accounts where you lose money in any business.

“But you have to take them in the context of the place that we are - in the journey we are on.

“I think there has never been a better time for Liverpool Football Club – ever – to have success than now because we have such a great team of people and depth to the infrastructure. Everything is there to capitalise upon it.”

VIDEO: Sports editor John Thompson on the latest LFC account figures

The accounts – reduced to a 10-month period to put the following years’ accounts in line with the playing season - also show turnover at £169m. Had the accounts been taken over 12 months, that would have translated to a rise on the previous year of just over £5m.

Exceptional costs totalling £9.6m relate in part to settlements with several high profile employees who have now left Anfield.

Among others, these are understood to include Kenny Dalglish and some of his backroom team, former Director of Football Damien Comolli and Australian ex head of Sports Science Dr Peter Brukner.

Exceptional costs also relate to wider club restructuring and stadium project costs, with the Reds cautiously but confidently on course to redevelop Anfield as part of a major regeneration programme for the Anfield area.

During the period covered Liverpool signed seven new players including Jose Enrique, Sebastian Coates and Craig Bellamy and extended five player contracts, including that of skipper Steven Gerrard.

Eight players – including Raul Meireles – were transferred out; three others Alberto Aquilani, Daniel Pacheco and Joe Cole were sent out on loan and eight youngsters given professional contracts, demonstrating what Liverpool believe is the club’s commitment to its youth development policy.

The Reds also highlight their hard work and success in the growing world of social media.

Liverpool say they are the most globally active football club on Twitter with more than 1.4m followers. The club runs Twitter accounts in nine different languages in countries around the world.