Cradley is "disappointed" with its results for the year to 30 June and its problems have been compounded by cancellations for a significant amount of autumn work, particularly in the holiday sector.

Sales for the year rose 8.4% to 30.6m, a performance the group described as "satisfactory" considering adverse market conditions.

But pre-tax losses hit 1.07m, and joint managing directors Chris, Nick and Jeremy Jordan said Cradley would continue to make developments to ensure its long-term growth, "some of which will be painful, but all of which will be necessary".

The group took exceptional charges of 522,000, including 372,000 it wrote off after stopping its SAP development in February due to "the inability of the product to be able to handle our requirements". The matter has been passed to Cradleys solicitors and it hopes to resolve it within the next year.

The other 150,000 related to redundancies, which have been done on a voluntary basis so far. The group aims to reduce its pre-press planning staff to reflect its move to digital workflow, which it hopes will account for 100%, up from its current 80%, during the next year.

Cradley was also hit by retraining costs of around 260,000, primarily within the pre-press department, so that staff could move into other areas of the business.

And it made a 200,000 provision for doubtful debts "bearing in mind the current position of this industry", although it said "every effort"would be made to negate this.

Focus groups have been set up throughout Cradley, with all staff involved, to look at cost and efficiency.

The groups net interest payable rose from 58,000 to 461,000 during the year due to higher borrowings.

But Cradley is still cash-positive, generating 2.56m. Cradleys share price fell 21.4% to 8.65p on the results but had risen to 9p as PrintWeek went to press.

Story by Gordon Carson