NEWCASTLE UNITED are perfectly placed financially to strengthen again in the summer after posting a profit for the second successive year, according to the club’s managing director Derek Llambias.

The Magpies’ accounts for the year ending June 2012 show a profit after player amortisation – effectively the depreciation of contracts and transfer fees – of £1.4m to highlight that the business model put in place by owner Mike Ashley is working.

And while the figure is considerably less than the £32.6m profit posted 12 months earlier, Newcastle believe the latest results are a fairer reflection – the previous results included the fee of £35m received for Andy Carroll.

A further indication of the off-field progress is that an increased turnover of £93.3m – a rise of 5.4 per cent – has catapulted Newcastle back up to 20th in the revenue-generating club rich list beneath the likes of Real Madrid, Barcelona, Manchester United, Bayern Munich and Juventus.

“I think these accounts are boring, which is a really good thing. We’re not coming in here to say we’re in debt or whatever,” said Llambias last night, as he reflected on the accounts from an executive box overlooking the St James’ Park turf.

“This proves that we’re sticking to the working model we said we would do – and that it’s working.

“Our commercial revenues will kick in next year when Wonga comes on board (as shirt sponsors).

“We’ve got one more commercial deal that we’re very happy with. We’ll announce that before the end of the season.

“They are the biggest deals the club has ever had.”

Newcastle’s financial gains do not reflect the £111m interest free loan from Ashley to clear the debt when he bought the club in 2007, but does show that the club has paid an £11m chunk off a £29m cash advance from the sportswear tycoon.

But Ashley is happy with the status quo, with Llambias satisfied with a reduced operating profit of £7.5m and a 20 per cent increase in wages (£64.1m) mainly due to arrivals such as Yohan Cabaye, Sylvain Marveaux, Davide Santon, Papiss Cisse and the now departed Demba Ba.

“Mike isn’t having to put money in either. We had to have a clean piece of paper at first, and there were huge amounts of securitised loan, which had to be cleared,” said Llambias. “When we were relegated (in 2009), we had to borrow £29m to get us back into the Premier League and to reshape ourselves and push forward.

“Mike said he would advance it to us and to pay it back when the club can afford it, which we’ve done.

“In these accounts, you’ll see there’s £11m paid back to Mike. But we saved £4m in fees, which we would have had to pay to someone who would make a lot of money securitising our season ticket money.”

Despite the encouraging results on the balance sheet, Llambias readily admits “the story is about what happens on the pitch” and hinted that work is already well under way to make further adjustments to Alan Pardew’s playing squad during the summer.

Hopes are high from within the boardroom that Newcastle can go even further than the quarter-finals of the Europa League this season, with a two-legged meeting with Portugal’s Benfica to come.

And while the European competition has gathered importance and increased in excitement since the earlier group stages, Llambias accepts the competition had a negative impact on Premier League aspirations before the turn of the year.

“We want to win it,” he said.

“We’re going to give it a real go. If we win it, we know we’re in it again next season and we’ll learn from our mistakes.

We need a bit more depth, we’ve got a bit more depth now. We’re buying good, good players. It’s just a question now of buying well in the summer.”

He added: “You reflect on it: injuries, not enough depth plus the Europa League – it became a disaster.

“But then we did great business in January, staying within our model. So I think we were a net £31m spend in January, which is quite honestly, an achievement for the quality we bought.”

Recruitment and getting value for money remain firmly in Ashley’s mind, so chief scout Graham Carr continues to press ahead with his recruiting missions on the continent.

He has enjoyed unprecedented success from a Newcastle perspective in recent years, by acquiring the likes of Cabaye, Moussa Sissoko and Hatem Ben Arfa relatively cheaply, and he has been watching the France Under- 18s and Under-20s in the last fortnight.

“Graham is getting more and more company overseas now – he’s in L’Equipe every week!” said Llambias.

“As I say, the market is not just France. It’s difficult now for us because we’re not surprising anyone but we haven’t changed the way we behave or the way we trade.

“The French tried in January (to exploit us) but very quickly realised we weren’t budging.

“There’s that desperation there in January – they created that desperation that is endorsed by the clubs in the last few days of the window, when everyone goes potty. We don’t.

I think that’s a major factor.

We will continue in the pool that we do well in.”

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