Confectioner adds to portfolio with Derby deal

Confectionary firm Zetar has said it is to buy a Derby-based chocolate manufacturer in its first acquisition since 2007.

AIM-listed Zetar said the operations of Derwent Lynton will form part of its confectionery division, of which its Fakenham-based Kinnerton business is the largest part.

Derwent Lynton specialises in the manufacture of solid milk chocolate and chocolate flavour balls and eggs, hollow milk chocolate shapes, sugar-coated milk chocolate products including eggs and beans and chocolate drops covered in 'hundreds & thousands'.

In the year to the end of June 30, Derwent Lynton had sales of �4.2m (in 2009 it was �3.9m) and an operating profit of �114,000 (�31,000 in 2009). At June 30, 2010, net assets amounted to �0.6m.

Zetar said the cash it pays for the firm is dependent upon the level of working capital at completion, but said that the maximum payment would be �800,000.

It is anticipated that Kinnerton and Derwent Lynton's complimentary products and access to new markets will provide future growth opportunities.

Ian Blackburn, chief executive of Zetar, said: 'The acquisition of Derwent Lynton is complementary to our existing confectionery business, providing access to new customers.

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'Its additional manufacturing capability will also give Zetar the flexibility to offer new product variants to our existing customers.

'This relatively small acquisition is Zetar's first acquisition since 2007. We are continuing to review other small opportunities.'

In its interim results posted last month, Zetar said turnover was up 6pc in the six months to the end of October 2010 at �60.3m. Pre-tax profit rose 10pc to �2.4m in the same period.

The eight months to the end of December saw similar results with sales up 5pc to �84m.

The group has predicted reaching �140m turnover in the coming year.

Kinnerton, at Fakenham, accounts for just over 50pc of the group's turnover. Kinnerton produces more than 20 million Easter eggs per year, making it the nation's fourth largest Easter egg manufacturer below Mars, Nestle and Cadbury.

It is also the fourth largest trading company within the UK Christmas confectionery market.

Last Christmas the firm made and sold more than 10.3 million calendars, increasing its market share to 39.4pc, against Cadburys' 29pc.

It also produces own-brand chocolate for brands such as Marks & Spencer, Tesco and Sainsbury's and retailers in France, Australia, Japan and the USA.