Companies: ZTR   

Arriving as a cash shell on AIM last January with plans to buy confectionary and snack foods businesses, Zetar picked up chocolate maker Kinnerton in March for £32.2m and is eyeing up another move of up to £50m.

‘We’re looking at more chocolate rather than sugar confectionary,’ informs chief executive Ian Blackburn, ’but we’re interested in diversifying our product range so it could be savoury snacks also. We’re looking for a deal between £5m and £50m and we’re looking in Europe.’ To this end Zetar has refinanced its banking facilities, providing a better interest rate and five-year facilities of £15m for working capital and £10m for acquisitions.

At Kinnerton, the seasonally slower half proved sweeter this time as sales lifted 12.5% year-on-year, despite an unspectacular Christmas, mostly on increased sales to third-party manufacturers. This is lower margin, concedes Blackburn, but includes no overheads because it uses machinery and workforce that would otherwise stand idle. A loss before tax of £188,00 was delivered for the interim period to October from £21.9m revenues.

New premium own brand and private label products have been launched, which should contribute to further revenue growth. These include the company’s first foray into the ‘adult indulgent market’, with a range branded Cocoa Deli and its ‘innovative’ first product, the Lolly Truffle.

The second half looks promising, with a ‘very strong Easter order book’ predicted to be 15% up on last year. Analyst Charles Pick at independent broker Corporate Synergy forecasts £55.5m of sales for the whole of 2006, leading to £3.4m of PBT (up 17%) and 31.5p of EPS (up 16%), putting the shares on an agreeable p/e ratio of 10.6.

Considering likely further acquisitions, this seems a perfect time to invest.

Zetar	AIM	£19.16m	166.50p	-11.00p
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