SHORTBREAD and oatcake maker Dean's of Huntly has reported a dip in profit after putting more money into a pension scheme to help fund capital investment at its Aberdeenshire site.

The company saw pre-tax profits fall from £587,308 to £419,654, even though turnover edged up from £6.9 million to more than £7m.

However, administrative expenses increased from £1.3m to £1.55m with pension payments to directors rising from £256,137 to £471,804.

Bill Dean, managing director, said the business had decided to increase pension contributions in order to then borrow from the fund, as that was felt to be more cost effective than going to a bank. That money has been used to build a new 700sq m office and amenity block for staff, which is now being leased back by the company.

He said: "It seemed to be a wise move at a time when banks are pulling back on loans and overdrafts. It was a safe move for us."

Mr Dean was satisfied with the financial performance in the 12 months to June 30, 2012, in what was a "challenging" year.

He said: "We had a good, steady year. Obviously we would have liked the increase in turn-over to be more but we are pleased with it given the conditions in the economy.

"There has been greater stability in commodity prices although they are still high. We would like to see them come down but the chances of that happening are slim."

Export sales have grown to more than 6% of turnover, from 4% two years ago, with Dean's hoping to grow that to 10% in the next few years.

It sends goods to 28 countries with locations including India, China, North America and the Middle East.

Mr Dean said: "It is a good spread but it takes time to grow these markets. We have put a focus on it in the last few years and are starting to see some benefits coming through."

The business, started from Helen Dean's kitchen in 1975, is also looking at bringing new products to the market to extend its range beyond shortbread, biscuits, savouries and oatcakes.

While Mr Dean declined to give specific details he confirmed new products would be baked goods. He said: "Part of our strategy is to be working on four new products in any year and try to do two launches."

Trading in the current year was said to be following a similar pattern, with Mr Dean hoping commodity prices of ingredients such as butter, sugar and flour would remain stable.

"The biggest comfort factor [this year] is there has been no volatility in prices.

"Trying to react to that takes months and months to get an agreement and it has a huge impact on your accounts."

The accounts for 2012 show staff numbers were steady 119. Directors' remuneration increased from £228,602 to £234,654 although the highest paid saw their remuneration, not including pension payments, fall from £90,588 to £14,987.

An interim dividend of £102,000 was authorised on July 5 last year.

The accounts show an ordinary interim dividend of £53,100 was paid, down from £66,000. Net debt widened from £817,416 to £975,702.