Lowe is continuing with a series of cost-cutting measures

Southampton plc chairman Rupert Lowe says the club expect to report a 'substantial' pre-tax loss of around �5m for the financial year.

The figure for the year ending 30 June 2008 reflects the end of Premier League parachute payments as well as reduced ticket revenue and commercial income.

Official results due in the autumn are also set to show increased borrowing.

Lowe, who returned in May, said: "This is despite a profit on disposal of players amounting to over �12m."

"This is clearly not acceptable or sustainable."

He admitted the club would have to continue to reduce costs.

"With little spare family silverware left to sell, we are, and we will continue to concentrate on reducing the costs at operating levels," he added.

"However, the directors remain hopeful about the prospects for the forthcoming season.

"[Manager] Jan Poortvliet and [Academy director] Mark Wotte are very excited about what will be a young dynamic team determined to play fast and attractive football."