But chairman Milan Mandaric said much work was still needed to repair years of "mismanagement" on and off the field.
Turnover in the year to 31 May 2012 increased by £1.5m to £10.9m helping the club reduce operating losses to £4.9m – down from £6.8m in 2011. Despite the reported operating loss, the club said cash outflow from operating activities was only £1.2m compared to £6.7m in 2011.
Match receipts and other football income accounted for £6m of turnover with broadcasting revenue bringing in £1.2m. Average home league attendances increased from 17,816 to 21,338 and the number of season ticket holders also rose from 12,549 to 12,943.
Speaking about the club's promotion to the Championship, Mandaric said: "An extremely long season culminated in a final game against Wycombe Wanderers knowing that a win would secure promotion. Those memories will stay with me and rank as one of my happiest days in football."
But he added: "Having now been at the club for almost two years the true enormity of the task that lies before us has become apparent. Be under no illusion of the task that lies ahead to repair the damage years of decline have inflicted on this business."
During 2012, the Owls invested £174,000 in new assets, £1.2m in the transfer of player registrations and repaid part of the advanced payment of TV revenues from the Football League.
Mandaric said: "The decline of this great club can be traced back over the past decade, both on and off the field mismanagement has seen a true 'footballing institution' teeter on the edge of the financial abyss.
"Be under no illusion of the task that lies ahead to repair the damage years of decline have inflicted on this business
"Financial prudence must be instilled throughout the football industry, and no clearer example of the need for this principle can be seen at Hillsborough."
"The Financial Fair Play regulations that come in to force for the start of the 2013/14 season will help this process but, as your chairman, I will continue to make the difficult decisions that undoubtedly lay ahead, and I ask for your continued support and patience as we go forward together."