The business has been sold to German restructuring specialist Arques Industries for Euro2.2m (1.5m).

St Ives bought Johler Druck ten years ago, but its performance suffered when the German economy nose-dived. It was its sole German outpost, and had been viewed as surplus to requirements for some time.

The operation had been losing money for a number of years, although its performance improved last year when it reduced its losses by more than 50%. The operating loss at the 17m turnover company in the year to 30 July 2004 was 935,000.

Johler Druck had net assets of 9.4m so St Ives will take a 7.9m hit on the sale, together with an exceptional charge of 5.9m in goodwill previously written off to reserves. "A business is valued on its earning potential. Depending on your view this is not a bad price in the circumstances," said finance director Ray Morley. "We have tried to make the best of it for some time and over the last two-to-three years reduced its losses and made it saleable."

St Ives shares fell 3p to 355p after the disposal was announced this morning, but had recovered and risen to 360p by lunchtime.

Story by Jo Francis