Mike Ashley’s Frasers Group has reported an 18% rise in pre-tax profits as it continues talks about the potential acquisition of Debenhams. Frasers, which owns Sports Direct, the designer fashion chain Flannels and House of Fraser department stores, made no comment on the progress of discussions with Debenhams’ owners. However a decision on a deal, which could rescue at least some of its 124 outlets and thousands of jobs, is expected imminently. Debenhams has begun winding down and will close all its outlets by March if a buyer cannot be found by the time it has sold remaining stock. Ashley has long sought to gain control of Debenhams, which he wants to merge with House of Fraser to get the benefit of reducing combined costs, securing key stores and gaining Debenhams’ stronger own-brands such as Maine and Mantaray. He is also expected to cast an eye over Arcadia, the owner of Topshop, Burton and Dorothy Perkins, as well as Jaeger and Austin Reed, which collapsed into administration last month. Chris Wootton, the finance director of Frasers, told BBC Radio 4’s Today programme the company remained interested in Arcadia, but added: “The process has only just started so there’s a long way to go as to ascertain what - if anything – we look at with that”. Frasers said it was not paying a dividend as it wanted to “maximise flexibility in the near term with regards to a number of inorganic growth opportunities under review”. However, the company has not paid a dividend since 2009. Pre-tax profits for the group rose to £106.1m in the six months to 25 October, despite a 7.4% fall in sales as its stores suffered from Covid-related high street lockdowns. The rise was underpinned by increased efficiency and the coronavirus-linked business rates holiday at House of Fraser’s large stores, which helped return Frasers’ premium lifestyle division to profit despite a 0.7% fall in sales before acquisitions. The division made £28.4m profit in the half year against a £7.6m loss in the same period last year, as it revealed it had permanently closed another three troubled House of Frasers since April taking the chain to 45. Shortly after buying the business in 2018, Ashley said he hoped to keep at least 47 of House of Fraser’s then 59 stores operating, but he later admitted the turnaround project had proved tougher than expected, even before Covid hit. Ashley has warned that more House of Fraser stores are likely to close next year, with some landlords already seeking planning permission for alternative uses for the sites. Underlying sales at the core sports chain slumped by nearly 13% but underlying profits rose by 6.7%, which Frasers credited to strong online sales and increased efficiency. Ashley has also been making efficiencies, cutting his personal spending on use of the company jet and helicopter to £400,000 in the half year, from £1.2m in the same period a year before. David Daly, the chairman of Frasers, said the group expected underlying profits to rise by at least 20% for the year to April, up from a 10% rise predicted in August. He said: “In an industry sector blighted by the decline of the High Street we are really proud of our performance.” The company said it had been given confidence by strong online sales as well as the successful reopening of its stores in England on 2 December after the month-long high street lockdown. Daly took a swipe at the UK government for a “lack of clarity of guidance when it finally arrives” relating to the controls on “non-essential” retailers. He added: “The coming months will continue to be tough but we are well prepared and positioned for the future.”