Chief executive Barry Hibbert described the figures as not bad considering the market conditions.

Polestar was going full steam ahead with its investment plans, said Hibbert, with the presses for the new gravure plant on order with Cerutti and set to be installed by the end of this year.

A decision on a site for the gravure plant will be made in the next two weeks, he said, with a former colliery site in Rotherham only one of several sites being looked at.

The group has also invested 2m in a group-wide management information system from Technique Business Systems and Exel Computer Systems.

In the year to 30 September 2003 operating profit (prior to exceptionals) grew by 7% to 40m and its pre-exceptional EBITDA (earnings before interest, tax, depreciation and amortisation) rose 6.5% to 78.4m.

Restructuring at the group led to an operating exceptional cost of 16.5m.

Group sales increased by 4.3m to 488.7m, boosted by an increase in sales at its continental operations and exchange rate movements. However, UK sales fell by 9m.

Bottom line figures were unavailable, and Hibbert said early indications were that the companys results were in line with budget. Final figures will be signed-off by the end of the month.

Hibbert said: For the second year under new management Polestar has bucked the trend of the printing industry in growing its profitability and this has given our shareholder the confidence to support our major investment plans for the future.

Restructuring within the group is set to continue, and this will see older presses replaced by newer ones. And Hibbert said the group, still planned to go down to fewer, bigger sites.

Polestar also secured all key accounts due for renewal during the period.

Although the group did not have the luxury of a 95.8m surplus in 2003 (its 2002 results were boosted by this figure after its bond buyback), Hibbert said the company was continuing to improve cash management by reducing inventory levels and overdue debts.

Polestar has begun selling surplus land to release cash, and intends to continue to do this over the next 12 months. It also paid back 22.1m (Euro32.4m) of debt following the completion of the merger of its Spanish operations with those of Grupo Prisa.

Story by Andy Scott and Jo Francis