Ian Lenagan says he is confident Oxford United are on the right track despite announcing losses of more than £1million.

The most recent accounts, which cover the 12-month period up to June 30, 2012, reveal the U’s were in the red for £1,017,504.

Higher than expected spending on players, due to loan players acting as cover for what is described as a “terrible sequence of injuries” explains part of the financial headache – which is more than three times the £295,000 losses announced in the previous accounts.

There was also £150,000 spent on re-integrating the youth section from a separate entity back into the club following a return to the Football League.

A significant deficit was expected, but the final total is still far higher than the £750,000 U’s chairman Lenagan forecasted at a fans’ forum in February.

Despite the gloomy figures, which are expected to continue in this year’s accounts, Lenagan remains optimistic about the future.

He said: “The board expects the challenges of 2012 to continue for 2013.

“But as a result of the investments made into the playing squad, youth development – and more recently into sports science and performance analytics – we are confident the club is going in the right direction and the investments being made will ultimately lead to success.”

The shortfall was made up by investments totalling £1.2m from Lenagan’s Woodstock Partners Ltd, which has an 89 per cent stake in the club.

It increased the amount United owe the company up to more than £4.5m.

The good news for the club is that it is a soft loan and Woodstock’s latest accounts show they waived £151,000 in interest payments for the year up to January 2012.

It means United fans should not necessarily panic at the latest news.

Mark Sennett, chairman of supporters’ group OxVox, said: “Obviously we have concerns about the club making any loss, especially a substantial one like this, but the most important thing is the Lenagans are committed to underwriting these losses.

“Looking to the future, we want to see the club succeeding on the pitch and eradicating these losses.

“Supporters want to see a successful team but they also want a club that’s financially viable.”

The biggest worry for United will only come if they fail to halt the financial problems.

Sennett said: “These losses can’t continue because you can’t expect any owner to fund significant losses over a long period of time.”