PENMAN Engineering Holdings, the Scottish armoured vehicle manufacturer, has hiked profits sharply in its latest financial year after bringing down costs and administrative expenses.

The Dumfries-based company, now in the hands of a new management team after a deal struck since its financial year-end, booked profits before tax of £2.07 million in the year ended March 31.

Profits were up sharply on the £475,411 booked for 2013, when the firm's bottom line came under pressure from defence spending cuts by the UK coalition government.

Accounts newly available at Companies House show profits increased AT Penman, which serves clients in the Middle East, Africa and the Far East, in spite of falling turnover by 22 per cent.

Revenue dropped to £10.2m from £13.1m, and the directors in charge during the period covered by the accounts voiced their expectation that turnover will decline in the current year.

However, while turnover fell last year there was also a big drop in the cost of sales to £6.93m, compared with £10.33m last time out.

In addition, the company shaved more than £1m off in administrative expenses during the year. The accounts show state that administrative expenses were booked at £1.21m, down from £2.22m in 2013.

The accounts also show that trading over the year saw the company's net assets rise to £4.27m from £3.48m.

Penman Engineering was bought out by its former owners, a group of investors including directors Brian Findlay, Tony Rodgers, William Faerestrand and Andrew Smith, by Stuart St John-Claire, James Craig, James Knox and Colin Welsh, in July.

The company has also become a wholly owned subsidiary of Penman Specialist Services since year end.

Writing in the accounts, the former directors highlight efforts by the business to pursue opportunities across the vehicle manufacturing industry, including utilities providers, general coachbuilders and in the nuclear sector.

The directors said: "We are using all available resources throughout the group to obtain these opportunities.

"The group has an experienced workforce and believes that with the talent and skills at its disposal it is well placed to manage the risks in the marketplace and able to diversify across multiple sectors.

"The company and its subsidiaries are committed to the advancement of armouring and manufacturing practices in order to maintain standards and influence customers with the decision to work alongside us."

Penman's latest accounts show the average number of staff employed by the business fell to 100 from 123, with staff costs narrowing by nearly £1m to £3.82m from £4.75m.

Directors' emoluments rose to £237,425, up from £197,610 in 2013, while the total pay taken home by the highest paid director fell to £63,897 from £76,205.

Pension contributions totalling £12,203 were also paid on behalf of the company to the highest paid director to a money purchase scheme, up from £7620 paid to the scheme last year.

Mulling the company's prospects for the current year, the directors said: "The company's order book is encouraging although it is expected that the level of turnover will decline in the year to 31 March, 2015.

"The group will continue to meet the demands of its customers required under contract and continue to seek diversification opportunities."

An interim dividend of 8.962p per share was paid to ordinary shareholders during the year, the accounts show. The directors did not recommend paying a final dividend.