Speaking as the group announced year-end results that showed a major turnaround in its financial performance – it returned to profit and slashed net debt by £16.3m – chief executive Patrick Martell said: "We are looking to acquire capabilities and services where our financial strength and scale is something they [the acquisition target] don't have. What they have that we want is expertise."

He cited this year's £11.7m purchase of data management firm Occam as an example, and added: "We are keeping a close eye on developments in the print market too, and if there are opportunities we think we should invest in, then we will do so."

Sales in the year to 30 July were down 6.3% to £382.3m, reflecting continued pricing pressure and the company's strategic move away from unprofitable contracts.

Operating profits prior to exceptional costs increased from £10.2m to £16m, while underlying pre-tax profits almost doubled to £14.4m (2009: £7.3m).

Despite exceptional costs of £6.3m that included the closure of its Andover and Edenbridge sites, last year’s £7.2m loss was reversed and the group posted a pre-tax profit figure of £8.1m for the year.

"We recognise we can't just keep cutting costs and we are looking to extend our range of services, but we will not build sales at no margin," Martell added.

The group's net debt is now just £2.7m (2009: £19m), gearing is negligible, and it can call upon £56.8m of its £70m banking facility.

Although the lion's share of operating profit currently comes from books (see breakdown below) finance director Matt Armitage refuted suggestions that books were propping up the whole group: "All of the businesses, with the exception of magazines, are making a profit. And all of them, including magazines, are generating cash. We have a big depreciation charge in magazines, too, because we're so well invested there."

The PLC also revealed that it has put St Ives House, its south London HQ, up for sale and is considering a move to more modern, leased space in the Blackfriars area of the capital. "It's too big for us now and we are rattling around in it. We can put the money from this investment to better use elsewhere," Martell explained.

St Ives by segment

Media products – books and magazines

Sales down 4.7% to £147.2m, operating profits up 10.5% to £13.6m.

In books the group has added to its print-on-demand facilities at Clays with a new Kodak line for producing extremely short runs and single copies. It has also renewed a number of major contracts with key publishing clients, including HarperCollins.

In magazines it has won three weekly titles – The Grocer, TES and THE (Times Educational Supplement and Times Higher Education) – helping to mitigate the loss of the IPC Media contract. "We have rationalised magazines down to about the right level to where the market is. We are fully utilised at the moment," Martell said.

The six-unit Manroland Rotoman 16pp web from the closed Edenbridge commercial/direct mail plant has been relocated to the Peterborough factory.

Commercial products – direct response, commercial print, point-of-sale, exhibitions and events, and newly-acquired Occam

Sales down 7.6% to £214.7m, but the division returned to profit, posting an operating result of £2.4m (2009 loss: £2m).

Direct response and commercial print, along with exhibitions and events, are back in the black. Profits in point-of-sale, though, were down on the previous year. However, the firm renewed its PoS contract with M&S and won new work from Game and Warburtons. On an annualised basis margins at Occam would have been 9.5%, and Armitage said the aim was to achieve double-digit margins in that part of the business.

Cross-selling of the Occam services to St Ives existing clients, and of print services to Occam clients, is well underway.