Blues report half-year profit

However, despite the club winning promotion back to the Barclays Premiership at the first opportunity, plc chairman David Sullivan predicts Blues will make a loss in the remainder of their financial year.

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Money to spend: but Steve Bruce has warned the club won't pay over-inflated prices

That will be countered next season by the injection of at least £30million thanks to their return to the top flight.

"As anticipated, relegation substantially reduced turnover and hence affected performance at the operating level, despite the measures taken to reduce costs," said Sullivan on the latest results of the Coca-Cola Championship runners-up.

"The consequent trading losses were offset by gains from the sale of David Dunn [to Blackburn] and Matthew Upson [to West Ham], leaving a profit on ordinary activities before taxation of £3.4million.

"Promotion will mean a minimum direct contribution of approximately £30million from the Premier League, together with wider positive effects in attendances and commercial revenue.

"This should significantly improve trading levels, but the effect will largely not show through until the next financial year.

"We expect the remainder of this financial year (which includes only a few weeks of Premiership income) to show a loss."

Manager Steve Bruce has been fully backed by the Birmingham board during his tenure at the club and he can expect to have money to spend to strengthen the squad on their return to the elite.

However, Sullivan warned the club were not prepared to pay over-inflated transfer fees or wages.

"We are mindful of the risks for newly-promoted clubs of relegation and will continue our strategy of protecting the club from an unrealistic and unaffordable wage bill," he added.

"However, it is our intention to invest heavily in the playing squad, but we will focus on young, hungry and passionate professionals who want to make a significant contribution to the success of Birmingham City.

"In the competitive world of football, with many clubs chasing the same players, what becomes important is not how much money is spent but how well it is spent.

"We will endeavour to invest the club's money as wisely as possible."

Sullivan also revealed investment would be made to upgrade the main stand at St Andrew, having already spent £1million on improving the club's training facilities in the last year.