Tangent's revenue growth was partially negated by the rising cost of sales, which increased by more than £1m to £9.6m. Profits were also hit after the group recorded an increase in operating expenses from £6m to £7.7m.

Piers Caldecote, non-executive chairman at Tangent, said the company had not yet been able to take a bigger step up in size, which resulted in overhead costs as a proportion of revenues remaining higher than anticipated.

"However I am confident we can improve performance, both immediately through our own efforts and through increased activity from a number of market segments. We will also work harder on building scale," he added.

Within its Direct division, which consists of customer insight agency Snowball and digital printer Ravensworth, sales increased year-on-year by 9% to £14m.

Underlying operating profit from the division was down 4% for the full year to £991,000.

The company made sales of £9.7m in the second half of the year, a figure that, according to management, exceeded expectations. Revenues were helped though its acquisitions, such as Snowball, while it also cited growth in its core business.

According to Tangent, The Digital Print Partnership (DPP), its wholesale online print ordering business, has also grown to represent 6% of revenues at the group.

In its next financial year, the group said that it is "well-positioned" to pick up revenues from growth markets such as data insight and digital marketing, aided by its TaoBase and Marketing Toolkit platforms.

Tim Green, chief executive, said: "In line with recent economic recovery, we have delivered two consecutive periods (half year) of growth since the second half of 2008-9 to produce a result which is in line with management's expectations.

"This has been driven by strong second half growth from core accounts and increased activity from the estate agency sector. We expect this trend to continue, and for growth in the first half of the year to be substantially higher than the first half of 2009-10."