11 buckingham street - morningstar, inc

RepoRt and accounts 30 apRIL 2007

Food with Attitude11 BuckIngham stReet London wc2n 6df

phone: 020 7004 2700fax: 020 7004 2701

Global Reports LLC

• Two acquisitions during the year: Salamanda and Humdinger; another since the year end: Britannia

• Turnover up 64% to £94.9m (2006: £57.9m)

• EBITDA* up 43% to £9.3m (2006: £6.5m)

• Operating profit** up 55% to £7.6m (2006: £4.9m)

• Basic earnings per share up 71% to 31.8 pence (2006: 18.6 pence)

• Underlying diluted earnings per share up 16% to 41.5 pence (2006: 35.7 pence)

• Total borrowings at 30 April 2007 of £9.8m (30 April 2006: £9.0m)

• Natural & Premium Snacks division represented 35% of Group turnover (2006: 1%)

• Board strengthened

*EBITDAisstatedbeforeshare-basedpaymentcosts.**Operatingprofitisstatedbeforegoodwillamortisationandshare-basedpaymentcosts.

contents

activities

highlights

The Zetar Group comprises Confectionery and Natural & Premium Snacks divisions.

Year ended 30 April 2007

20072006

3 Zetar April 20072 Zetar April 2007

Turnover by division:

Thisannualreportisprintedon75%recycledpaper

3 ........................................ highlights and activities

4 .........................chairman’s statement and strategy

6 ...............................................operational review

12 ................................................. financial review

14 ..............................................board of directors

15..................................................directors’ report

17 ...........................................remuneration report

19 .................. statement of directors’ responsibilities

20............................... independent auditor’s report

21 ....................consolidated profit and loss account

22................................................... balance sheets

23 ................................ consolidated cash flow andtotal recognised gains and losses

24 .......................... notes to the financial statements

40 .............................................................timeline

41 ........................ notice of annual general meeting

42 ..................................... shareholder information

43 .................................. principal subsidiaries andtrading divisions

£61.4m

£33.5m

£57.1m

£0.8m

Global Reports LLC

5 Zetar April 2007

DAvID WIllIAmS Non-executiveChairman

4 Zetar April 2007

chairman’sstatement

Zetar’s objective is to build a snack foods, confectionery and related food businesses group, based primarily in the UK with operations in Europe.

We aim to deliver value to our shareholders through the organic growth of Group businesses, enhanced by sharing of Group resources, and by making further acquisitions. Our mission is to achieve above sector average annual increases in earnings per share.

We will continue to concentrate on companies that, among other commercial considerations, focus on healthier options, quality products, innovation and service at competitive prices.

I am very pleased to report that the Group has delivered a strong performance in the year ended 30 April 2007 driven by new customers, high levels of innovation and the successful integration of our first acquisitions. This is reflected in results which are ahead of expectations with turnover increasing 64% to £94.9 million (2006: £57.9 million), operating profit before goodwill amortisation and share-based payment costs increasing 55% to £7.6 million (2006: £4.9 million), basic earnings per share increasing 71% to 31.8 pence (2006: 18.6 pence), and underlying diluted earnings per share increasing 16% to 41.5 pence (2006: 35.7 pence).

The focus during the year under review was to develop Zetar into a broader-based business offering customers healthier snack products as well as a wide range of niche and novelty chocolates. Extending the range of products on offer has resulted not only in further sales, but also in a broader customer base.Group management has done a tremendous job in

ensuring that the acquisitions made during the year have been integrated fully and that the synergy opportunities created, including cross-selling the extended product range to our important customers, have begun to be addressed. Acquisition led growth continues to be a key strand of the Group’s ongoing strategy and the Board continually assesses interesting acquisition opportunities. We are, however, very selective and will only proceed if the financial, product and customer profiles meet our requirements.

With the appointment of Dale mullins as Group Finance Director in February 2007, the Board believes that it has the executive management team in place to optimise the Group’s immediate future prospects. In addition, marion Sears, our independent non-executive, has worked hard at introducing more rigour to our corporate governance processes, particularly at Board level, to ensure we are well positioned to manage future growth.

The performance of the Company’s shares, rising from £4.50 per share at the time of the 2006 results to £5.69 per share today, I believe reflects the fact that investors in the Company share the belief that the Group has delivered and will continue to deliver strong performances. Our results for the year ended 30 April 2007 have vindicated this belief and I would like to thank every member of staff within the Group

for their continued hard work and assistance in delivering them.The Board is encouraged by the performance of the Group in the current year to date and believes that the Group is well placed to continue to grow strongly.

chairman’sstatement

strategy

Global Reports LLC

operationalreview operationalreviewTHE FUTUrEPressure on margins from customers, raw material cost increases and general inflation is expected to continue. This is being addressed by challenging our own supply base and factory efficiency levels and by encouraging investment in cost saving projects and, of course, our concentration on the development of new products.

In order to deliver increased levels of growth it is important that we develop further our intra group trading opportunities. We will continue to build upon our relationships in the UK and, increasingly, overseas, and to extend the supply of product from each Group factory across the customer base. Good volume growth can be sustained by high levels of innovation of both premium and healthier product alternatives. We anticipate supporting our drive for growth by investing at least £3 million during the current year, on projects including a new 20,000 sq ft factory for Salamanda and a new packing line and roasting and flavouring machine at readifoods.

The acquisition of the assets and business of Britannia has provided Zetar with an effective entry into the rapidly-developing baked snacks and biscuits sector and extended the Group’s range of healthier products. We believe this sector of the snack food market will grow significantly in the coming years as consumers become increasingly health conscious.

Zetar will benefit in the coming year from two important marketing initiatives. First, as announced in may, using Kinnerton’s expertise in character licensing, we have entered into an agreement with a major licensor to launch a range of healthier snacks sourced from products around the Group. The first of these launches focuses on portion controlled fruit and yoghurt covered snacks for children.

There is also an increasing opportunity to be found in adult snacking and we are in the process of introducing to market a new ‘Deli’ range of healthier premium snacks drawn from the manufacturing capabilities of the Group. The range has been specifically designed to offer retail customers a single source snacking solution.

Initiatives to become more environmentally friendly, within the constraints of operational and financial performance, are being considered across the Group. In the immediate future we aim to use less packaging in general and to adopt recycled and environmentally friendly packaging where possible.

Potential further acquisition targets have already been identified. In particular we remain keen to extend the range of products offered by the Natural & Premium Snacks division and also to add a European dimension to the Group to take advantage of pan-European trading opportunities. The Group has the financing flexibility to take advantage of appropriate acquisition opportunities as they arise.

CUrrENT TrADING AND PrOSPECTSSales in the first 11 weeks of the current year were £12.4 million compared to £7.1 million for the same period in 2006 and support the Board’s confidence with regard to expectations for the full year.

INTrODUCTIONZetar’s objective is to build a balanced portfolio of niche snack and confectionery products with an emphasis towards healthier options and/or premium products and to become a major player in the sectors it addresses. The year to 30 April 2007 was another year of good progress towards this goal.

Two strong trading divisions have been established successfully; sales growth in both the Confectionery division and the Natural & Premium Snacks division has contributed to Group profits significantly in excess of both the previous year and the Group’s original budget. The expansion of the Group’s product range has resulted in a more balanced customer base and the acquisitions during the year of Humdinger and Salamanda (the trading name of Horsley, Hick & Flower) significantly strengthened our position in the healthier snacking sector, a position further enhanced by the acquisition of Britannia since the year end.

2006/7 FINANCIAl rESUlTSGroup sales for the year ended 30 April 2007 rose by 64% to £94.9 million (2006: £57.9 million). Of this £61.4 million (2006: £57.1 million) was contributed by the Confectionery division and £33.5 million (2006: £0.8 million) by the Natural

& Premium Snacks division.

Adjusted operating profit and adjusted profit before tax rose

by 55% and 69%

to £7.6 million and £6.6 million respectively. Underlying diluted earnings per share of 41.5p represent an increase of 16% over the previous year.

The Group generated £5.8 million (2006: £5.3 million) of cash from operations during the year, after a net working capital increase of £3.5 million (2006: £1.2 million) relating to the growth of the Group and the timing of acquisitions during the year. Total net borrowings at 30 April 2007 were £9.8 million (2006: £9.0 million).

OPErATIONSThe sales growth of the Natural & Premium Snacks division has been underpinned by the continuing demand from consumers for food of all types, including snacks, that are not only in tune with their increasingly hectic lifestyles but are better for them and also taste good. The Natural & Premium Snacks division now comprises approximately 35% of Group sales compared to 1% last year and demonstrates our commitment to growing this part of our business.

The Confectionery division continued to grow at a steady rate. Sales increased by almost 8% in the year under review and have risen by almost 50% over the last three years. The division has successfully extended its indulgent product range to a broader private label customer base derived from its own ‘Cocoa Deli’ brand. It also continued to provide chocolate products for the increasing proportion of the population who suffer from allergies, particularly nut and dairy allergies. Notably during the year we invested in equipment and procedures to enable the first volume deliveries of organic chocolate products, as well as in the acquisition of Salamanda, in October 2006, extending the division’s product range to include chocolate and yoghurt enrobed fruit, nuts and seeds.

7 Zetar April 2007 6 Zetar April 2007 Global Reports LLC

confectionerydivision confectionerydivisionConfectionery Confectionery

CONFECTIONErYIn the year ended 30 April 2007 the Confectionery division contributed sales of £61.4 million (2006: £57.1 million) and operating profit after goodwill amortisation and share-based payment costs of £4.2 million (2006:£3.9 million).

This growth has been achieved against the background of an evolving confectionery industry, for example to address the growing government and consumer concerns over increased levels of obesity. The latest industry statistics published by Neilsen also show that in 2006 private label confectionery sales across Europe continued to grow despite strong competition from the major brands. In the UK in 2006, almost 25% of all UK confectionery products sold were private label and the private label market itself grew by 1.2%. However, whilst sales of products such as plain recipe chocolate bars decreased by 21%, healthier offerings such as treated nuts and coated fruit confectionery grew by 4% and 19% respectively within the retailer brand market.recognising the shifting patterns that influence the confectionery market place, we have concentrated our investment in those areas that we believe will underpin our ability to satisfy consumer and customer demand.In order to increase its presence in the quality premium confectionery sector, on 23 October 2006 Kinnerton

purchased Salamanda, a new company specialising in the manufacture

of coated quality fruit, seeds and nuts by enrobing them

in a variety of coverings such as Belgian or Fair Trade chocolate as well as yoghurt.

The acquisition of Salamanda has not only given the Confectionery division the opportunity to participate further in the healthier and snacking end of the chocolate market, but also created obvious synergies with the Natural & Premium Snacks division, with regards sourcing fruit and nuts and including chocolate or yoghurt covered ingredients in certain fruit and nut mixes. Following the integration of Salamanda and the development of customer specific products several new retailer listings have been obtained and new products have been added to Kinnerton’s premium Cocoa Deli range. To accommodate this anticipated volume growth, the Board have approved an investment in a brand new 20,000 sq ft factory near York. The new factory will be divided into nut and nut free departments and triple current production capacity. It is anticipated that the factory will be fully commissioned by the end of September 2007 and it will also seek organic accreditation.

Investment during the year in the Cocoa Deli range has opened up new listing opportunities in both British and export markets, despite the current weakness of the US Dollar. Similarly, the range has acted as a catalyst for private label initiatives. Kinnerton is well regarded by its customers for a “can-do” attitude that combines product innovation and manufacturing flexibility. These attributes when applied to the premium adult market have spurred the growth in private label turnover in the year.

The Fakenham factory became fully accredited for organic production during the course of 2006. This provides a unique ability to offer Nut Free and Organic chocolate, building on the allergy initiatives that Kinnerton pioneered eight years ago. Our Nut Free and Dairy Free ranges

require high levels of technical and production discipline to sustain the integrity of the products. During the course of the year, the factory infrastructure and systems and procedures were upgraded, including the introduction of systematic DNA testing to enhance our controls. Gaining organic accreditation is a further example of how Kinnerton has identified niches within the confectionery market which allow it to differentiate its products. Christmas and Easter are usually regarded as special treat occasions and are arguably, therefore, less affected by issues of child obesity. However Kinnerton is still mindful of its obligations in this area and has introduced portion control, as well as adapting recipes to remove hydrogenated fats and adopting the almost universal use of natural colours and flavours.

Kinnerton’s Australian business would have reported profit growth over the previous year but for an Easter product recall, due to a labelling mistake, which cost approximately £0.15 million. A strong Christmas programme of character products and two new retail customers make us confident of a recovery in the current year. It is also intended that our sales and marketing organisation based in Sydney, will also represent other Group companies in the region. The technical team based in China has provided invaluable support to Kinnerton’s purchasing and QA departments and is increasingly of assistance to the Natural & Premium Snacks division in ensuring ingredients, sourced from China, meet all specifications.

As previously highlighted, third party sales to other confectionery manufacturers declined during the year. We expect this area of the business to recover during the course of the current financial year.

We have continued to invest, not only in the Fakenham factory, where additional capacity is currently being installed, but also in food and product development managers to facilitate an anticipated increase in new product launches, particularly of private label and Cocoa Deli products. Kinnerton has a strong track record of using character licences to ‘brand’ certain products and has continued this approach into the current year, signing up Spiderman 3, Shrek 3, Transformers, Winnie the Pooh, Pirates of the Caribbean 3 and World Wrestling amongst others. Together with our character mainstays such as Thomas the Tank Engine, Barbie, The Simpsons, Peter rabbit, Bob the Builder and Pingu we have a strong portfolio of characters for the coming year, both for year round products and seasonal ranges.

operationalreview operationalreview

9 Zetar April 20078 Zetar April 2007Global Reports LLC

natural&premium snacksNATUrAl & PrEmIUm SNACKSIn the year ended 30 April 2007 the Natural & Premium Snacks division contributed sales of £33.5 million (2006: £0.8 million) and operating profit after goodwill amortisation and share-basesd payment costs of £1.8 million (2006: £31,000).

The Group’s Natural & Premium Snacks Division comprises Humdinger and readifoods, acquired in July and march 2006 respectively. Humdinger is an importer, processor, packer and distributor of ambient food products, predominantly premium quality and organic dried fruit and related products. The division is now established as one of the leading UK suppliers of value and premium ready to eat dried fruit and nuts.

The consumption of these core products continues to grow, fuelled by a consumer focus on diet and natural foods and ingredients. The nut market was worth £258 million and grew by 8% in the year ended 25 February 2007*. The dried fruit market, which is sub-divided into “Baking” and “Snacking”, was worth £193 million in aggregate in this same period and grew by 5% and 14% respectively in 2006.**

During the year, Humdinger extended its core dried fruit business with the introduction into the premium sector of a range of preservative free, ready to eat dried fruit private label products, including apricots, prunes and dates. In addition, Humdinger was appointed to represent Ocean Spray for their UK fruit mixes.

Humdinger is also at the forefront of developing a wider range of healthier and convenient snacks. It has added to its growing portfolio of “fruit snacks” during the year with the launch of fruit crisps, Fruit Strings, and, in conjunction with the “HIT” characters Pingu, Bob the Builder and Thomas the Tank Engine, mini box fruit snacks.

Three years ago Humdinger developed pure fruit sticks which it initially imported and sold as “Humzingers”. Humzingers are now sold by all leading UK retailers and recently the first export orders have been received. Whilst initially manufactured overseas, a 12,000 sq ft factory has now been commissioned in Hull to allow the manufacture of the fruit sticks in-house and to take advantage of any additional private label opportunities.

readifoods has sought to reduce its reliance on Christmas related sales, by increasing its all year round product offering. Its customer base has also been extended resulting in a year on year 17% increase in the number of retail packs of dried fruit & nuts processed. A further increase of 25% is anticipated in the current year, which includes the recent addition of another major retailer which has just placed its first orders for readifoods products. readifoods has committed to invest over £0.75 million in innovative packing and nut flavouring machinery for premium products in calendar 2007 and has ordered a further production line and a second nut roasting and flavouring machine to be installed this summer to accommodate the anticipated increase in volumes.

Both companies in the division are experiencing a significant uplift in sales of organic product. In particular Humdinger’s organic packing partnership with Community Foods continues to flourish with export sales being added to the UK Crazy Jack brand. Humdinger and readifoods are also selling more private label organic fruit and nuts

and Humdinger is about to launch a new range of organic biscuits, the latter being launched alongside our first pan-European private label biscuit range.

POST BAlANCE SHEET EvENTThe formation of a new Group subsidiary, “The Baked Snacks Company”, and the acquisition of the assets and business of Britannia Biscuits Company (International) limited in may 2007, has given us an effective entry into the rapidly developing baked snacks category. Its innovative range of relatively low fat / low salt sweet and savoury snacks has been designed to appeal to consumers as they become increasingly health conscious. The Board is encouraged by the level of interest shown in the product range by potential customers in the period since acquisition.

operationalreview operationalreview

10 Zetar April 2007 11 Zetar April 2007

Sources:*TNS Worldpanel 52 weeks ended 25 February 2007** TNS 2006

natural&premium snacks

Global Reports LLC

financialreview financialreview

13 Zetar April 200712 Zetar April 2007

rESUlTSIn its second full year of operation the Group has been able to report significant increases in turnover and profitability at all levels, with significant contributions coming from acquisitions made during the year and just before the start of the year. like-for-like annual turnover and operating profit increased by 5% for Kinnerton, the only business contributing to Group results throughout the whole of the last two years. Turnover has increased to £94.9 million (year to 30 April 2006: £57.9 million); adjusted operating profit (before goodwill amortisation and share-based payment charges) reached £7.6 million (2006: £4.9 million); and profit before tax was £5.0 million (2006: £2.2 million).

The statutory comparative results for the longer 72 week period ended 30 April 2006, which covered the period from incorporation, are set out in the consolidated profit and loss account. This review refers to the pro forma results for the year ended 30 April 2006 as they are more relevant to meaningful comparison with the following year and on-going trends in the future development of the Group.

Net interest payable and similar charges for the year amounted to £1,039,000 (2006: £1,015,000, excluding non-recurring bank charges of £635,000 described in note 6 to the financial statements). Net interest was covered 7.4 times by adjusted operating profits (2006: 4.9 times) and 8.9 times by EBITDA (2006: 6.4 times).

EArNINGS PEr SHArEThe Group’s adjusted basic earnings per share increased by 20% to 47.2p (2006: 39.3p). Basic earnings per share, including the impact of goodwill amortisation and share-based payment charges, increased by 71% to 31.8p (2006: 18.6p). Underlying diluted earnings per share, reflecting the impact of potential ordinary shares from the exercise of options and warrants, increased by 16% to 41.5p (2006: 35.7p).

TAxATIONThe tax charge for the year was £1,802,000 at an effective tax rate of 36.2% (2006: 42.5%) on profit after goodwill amortisation and share-based payment charges. However, before goodwill amortisation and share-based payment charges, the effective tax rate was 28.4% (2006: 31.0%). The deferred taxation liability at 30 April 2007 was £691,000 (2006: £216,000).

ACQUISITION OF HUmDINGErOn 18 July 2006 the Group completed the acquisition of Humdinger

limited, for an initial consideration of £10.0 million, comprising £8.5 million in cash, £0.3 million loan notes, and £1.2 million

in Zetar Plc shares. Deferred consideration is also payable dependent upon the operating profits of Humdinger

for the two years ending 30 September 2008. At 30 April 2007 £0.3 million has

been provided in respect of these deferred consideration

payments. Further details of this acquisition are set out in note 11 to the financial statements.

ACQUISITION OF HOrSlEY, HICK & FlOWEr (TrADING AS “SAlAmANDA”)On 23 October 2006 the Group completed the acquisition of Salamanda, for an initial consideration of £1.2 million, comprising £0.9 million in cash and £0.3 million in Zetar Plc shares. Deferred consideration is also payable dependent upon the operating profits of Salamanda for the two years ending 30 April 2009. At 30 April 2007 £1.05 million has been provided in respect of these deferred consideration payments. Further details of this acquisition are set out in note 11 to the financial statements.

EQUITY FUNDINGIn July 2006 2,800,000 shares were issued and placed with institutions at £4.00 per share to raise £11.2 million (£10.8 million net of costs of the issue) in connection with the funding for the Humdinger acquisition. In addition, the vendors of Humdinger and Salamanda were issued with 305,701 and 66,964 shares, respectively, in partial settlement of consideration payable. During the year 64,543 share options and warrants were exercised at £2.00 per share. In total 3,237,208 shares have been issued in the year for a total of £12.5 million (net of issue costs).

CASH FlOWThe net cash inflow from operating activities during the year was £5.8 million (2006: £5.3 million). Net working capital increased by £3.5 million during the year, including the impact of seasonal factors associated with the timing of the Humdinger acquisition.

Net interest and similar charges paid in the year amounted to £1,364,000 (2006: £896,000, of which £220,000 related to non-recurring charges associated with termination of previous banking arrangements). Interest payments exceeded interest charges in the profit and loss account as a result of the net movement of £317,000 in interest accrued on loan notes, a significant proportion of which were redeemed in cash during the year.

Payments of corporation tax during the year of £1,425,000 (2006: £333,000) are significantly higher than last year, reflecting the effects of the general growth of the Group, changing tax accounting periods for acquired businesses, and the requirement for acquired businesses to move into the quarterly tax payment on account regime for larger tax payers.

Capital expenditure during the year amounted to £1,902,000 (2006: £1,341,000) on general improvement and enhancement of manufacturing facilities and equipment, including in particular at our Norfolk chocolate factory: a new and enhanced packing facility; equipment and systems for the introduction of organic chocolate; and a larger and more sophisticated product development kitchen.

BOrrOWINGSIn August 2006 the Group issued £1.75 million secured variable rate loan notes to the vendors of the Kinnerton Group in respect of the final performance-related deferred consideration payment for the year ended 30 April 2006.

The Group’s total net debt at 30 April 2007 amounted to £9.8 million (2006: £9.0 million), comprising net bank and other asset finance indebtedness of £7.6 million (2006: £2.3 million) and £2.2 million (2006: £6.7 million) of loan notes and accrued interest. Of total net debt, £3.5 million (2006: £2.0 million) is due within one year (including net overdrafts and cash at bank). During the year the majority of loan notes issued to the vendors of the Kinnerton Group, together with accrued interest thereon, have been redeemed in cash. Since 30 April 2007, £1.7 million of outstanding vendor loan notes and accrued interest have been redeemed in cash, leaving only £0.5 million remaining to be redeemed.

BANK FACIlITIESThe Board reviews the Group’s forward cash flow projections on a regular basis and ensures that it has adequate bank facilities to cover its borrowing requirements for the foreseeable future. The cash flow projections take account of the Group’s seasonal working capital peak, investment plans, potential deferred consideration and loan note payments. Prudent assumptions are used in the preparation of the projections and the Board ensures that the bank facilities provide an appropriate level of headroom to allow for unforeseen circumstances.

At 30 April 2007 the Group had revolving credit / overdraft facilities of £15 million (2006: £15 million), of which £12.2 million were unutilised; acquisition facilities, repayable by instalments over five years, of £3.9 million (fully drawn-down); and an asset finance loan, repayable by instalments, over five years, of £4.0 million (fully drawn-down). All facilities have been provided by Barclays Bank PlC at rates between 0.75% and 3.00% above lIBOr. As yet unamortised costs at 30 April 2007 amounting to £130,000, associated with raising these facilities, are being written off over their five year life.

Since 30 April 2007, agreement has been reached in principle (subject only to finalisation of the relevant documentation) for the revolving credit / overdraft facilities to be increased to £17.0m and for an additional £5.0m five year acquisition facility to be made available. These additional facilities are primarily to fund the purchase of the business and assets of Britannia Biscuits by our wholly owned subsidiary undertaking, The Baked Snacks Company, and provide additional headroom for normal seasonal working capital requirements around the half year stage, in keeping with the overall growth of the Group. Pending formal completion of the facility documentation, the Britannia Biscuits acquisition has been funded using a proportion of the currently unutilised revolving credit / overdraft facilities.

FINANCIAl AND CrEDIT rISK mANAGEmENT

This is described in note 32 to the financial statements.

INTErNATIONAl FINANCIAl rEPOrTING STANDArDS (“IFrS”)The Group will be required to report for the first time under IFrS for the year ending 30 April 2008; accordingly the next interim statement for the six months ending 31 October 2007 will show results and comparatives reported under IFrS.

As has been highlighted extensively by companies listed on the london Stock Exchange’s primary market, the Official list, which were required to adopt IFrS for periods commencing on or after 1 January 2005, it should be emphasised that the amended presentation of results and net assets under IFrS has no impact on underlying cash flows or intrinsic values. Full explanations of the impact of IFrS reporting on the Group’s financial statements and reconciliations thereof to the equivalent statements prepared under UK Generally Accepted Accounting Principles will be provided with or alongside the Group’s next interim statement.

A more detailed review of the IFrS accounting and reporting impacts will be completed in the near future. In the meantime, based primarily on the IFrS transitional issues reported by listed groups in Zetar’s industry sector and the directors’ knowledge of the principal categories of transaction underlying the Group’s results and net assets, the principal areas that may impact on the Group are:

Goodwill – under the current Group policy goodwill is amortised on a straight-line basis over its useful economic life, typically 20 years. Under IFrS, goodwill is carried at cost, subject to annual tests for impairment, with write-downs charged against profits only when any impairment becomes apparent. This could lead to increased volatility in reported profits; however, the Group currently already reports results both before and after goodwill amortisation and would expect to do so in future in the event of any goodwill impairment charges against profits. Additionally under IFrS, goodwill is calculated net of any separately identifiable intangible assets acquired, which are capitalised and amortised over their economic lives; again this will have no impact on reported EBITDA or cash flows.

Deferred taxation – IFrS reporting is more codified in its approach to the recognition of longer-term timing differences than the UK standards under which the Group currently reports. This may result in additional and / or earlier recognition of deferred tax assets and provisions (with no impact on the timing of any related cash inflows or outflows).

Dale mullinsFinanceDirector

Global Reports LLC

DaviD Williams NON-ExECuTIvEChAIrmAN David, age 54, has been Chairman since Zetar was listed in January 2005. David is also Chairman of the Audit and Nomination Committees and a member of the remuneration Committee. He has more than 35 years experience in the investment market and was Executive Chairman of Waste recycling Group plc at its flotation in 1994. He is currently Chairman of marwyn Investments Group limited, Augean plc, Silverdell plc, Entertainment One plc, Aldgate Capital plc and Drury lane plc.

Clive BeeCham GrOupmANAGINGDIrECTOrClive, age 54, joined the Board in April 2005 and has been Group managing Director since July 2006. He was a co-founder of Kinnerton in 1978 and has been its managing Director since its inception. He continues to have board responsibility for the Kinnerton Group as well as leading Zetar’s operational initiatives related to product, packaging and customers.

maRiON seaRs NON-ExECuTIvEDIrECTOr marion, age 44, joined the Board in July 2006. marion is the Senior Independent Non-executive Director and a member of the remuneration, Audit, and Nomination Committees. She worked in the pharmaceutical industry and had a successful career in corporate finance, with particular experience of the healthcare and retail industries. She is Non-executive Director of Dunelm Group plc and Prelude Trust plc and is a member of PricewaterhouseCoopers’ Advisory Panel.

board of directors

ZetaR PlCregistration number - 05308258Joint Company Secretary Susan Fadil and robert Hillhousemayer, Brown, rowe & maw llP11 Pilgim Street london EC4v 6rW

solicitors DlA Piper rudnick Gray Cary UK llP 3 Noble Street london EC2v 7EE

Advisors

Nominated advisor and Broker Altium Capital limited 30 St James’s Square london SW1Y 4Al

Financial PRFinancial Dynamics Holborn Gate 26 Southampton Buildings london WC2A 1PB

Bank Barclays Bank PlC 1 Churchill Place london E14 5HP

auditorGrant Thornton UK llP Grant Thornton Housemelton StreetEuston Square london NW1 2EP

Dale mUlliNsFINANCEDIrECTOr Dale, age 48, joined the Board in February 2007. Dale is a Chartered Accountant who previously worked for KPmG and was senior Divisional Finance Director of Kier Group plc and, before that, Finance Director of mansell Construction Services limited between 1995 and 2007.

iaN BlaCkBURN ChIEFExECuTIvE Ian, age 50, has been Chief Executive since Zetar was listed in January 2005. Ian is also a member of the Nominations Committee. He is a Chartered Accountant who previously worked for KPmG and was Chief Executive and, before that, Finance Director of Perkins Foods between 1988 and 2003.


directors’report

The Directors present their report and the financial statements for the year ended 30 April 2007. This report should be read in conjunction with the operational review and financial review on pages 6 to 13.

IntroductionZetar Plc was incorporated on 8 December 2004 and admitted to trading on AIm on 6 January 2005. It was established for the purpose of acquiring, or making investments in, companies or businesses engaged primarily in the confectionery and snack foods or related markets.

Principal activities and business review During its initial 72 week period following incorporation, the Company acquired Kinnerton Group limited (since renamed Zetar International limited) on 13 April 2005 and readifoods limited on 30 march 2006. These acquisitions formed the basis for the Group’s two operating divisions:

• Confectionery manufacture of novelty and niche chocolate products, sold under private label, Kinnerton or other chocolate manufacturers’ brands within the UK, Australia and other export markets.• Natural & Premium Snacks Sourcing, preparation and supply of premium quality dried fruits and nuts, fruit and other snacks, primarily within the UK.

During the year the Group has added to the strength of both divisions. Humdinger limited was acquired on 18 July 2006 into the Natural & Premium Snacks division and Horsley, Hick & Flower limited (trading as “Salamanda”) was acquired on 23 October 2006 into the Confectionery division. The principal terms of these acquisitions are set out in note 11 to the financial statements.Since the year end the Group has acquired the assets and business of Britannia Biscuits Company (International) limited via a new wholly owned subsidiary, The Baked Snacks Company limited (“BSC”), for an initial consideration of £4.7 million. Additional deferred consideration of up to a maximum of £23.0 million may become payable dependent on the results of the business over the three years ending September 2010. The maximum amount falls due only in the event that the aggregate profit before tax of BSC over these three years is in excess of £18.0 million.A detailed review of the Group’s activities and performance is provided in the operational review and financial review on pages 6 to 13.

Results and dividendsThe Group’s profit before amortisation of goodwill and share-based payment charges and tax (“adjusted profit before tax”) for the year to 30 April 2007 was £6.6 million (30 April 2006 pro forma: £3.9 million). Detailed results for these periods are shown in the consolidated profit and loss account on page 21. The directors do not propose to pay a dividend for the year. retained profit for the financial year attributable to shareholders of £3.2 million has been transferred to reserves.

DirectorsThe directors of the Company during the year are shown in the remuneration report on page 18, together with details of the directors’ interests in the shares of the Company and details of any related party transactions relevant to the directors. m J Sears was appointed as a Non-executive Director and m I J Watts resigned on 27 July 2006. A D mullins was appointed as a Director on 1 February 2007.At the forthcoming Annual General meeting a resolution will be proposed for the re-election of I m Blackburn, who is to retire by rotation in accordance with the Company’s Articles of Association; A D mullins will be proposed for election for the first time.The Company provides insurance cover for its directors and officers in respect of certain losses or liabilities to which they may be exposed due to their office.D J Williams is a director of marwyn Investments Group limited (“mIGl”) and certain of its affiliates. marwyn Investment management llP, a wholly owned subsidiary of mIGl, manages on an arms-length basis marwyn ventures Fund 1 llP, a substantial shareholder of the Company as detailed below.

Share capital Details of shares allotted by the Company during the year are set out in note 21 to the financial statements.

Substantial shareholdings In addition to the Directors’ holdings set out in the remuneration report on page 18, the Company has been notified of the following interests of 3% or more in its issued ordinary share capital as at 23 July 2007:

Share options/warrants Details of share options and warrants to acquire ordinary shares in the Company are set out in note 21 to the financial statements. At 30 April 2007 a total of 2,414,012 options/warrants over ordinary shares have been granted and remain outstanding (2006: 2,478,555). 44,000 options and 20,543 warrants were exercised in the year at a price of £2.00 per ordinary share.Details relating to the directors’ share options are set out in the remuneration report. The Company has adopted a model code for director’s dealings in securities of the Company which is appropriate to a company quoted on AIm. The Directors will comply with rule 21 of the AIm rules relating to directors’ dealings and take all reasonable steps to ensure compliance by the Group’s senior management.

Corporate governance The Board currently comprises two non-executive directors and, following the appointment of a Group Finance Director during the year, three executive directors. At this stage of the Group’s development, the Board considers its current members provide an adequate balance of operational and financial experience to grow, control and safeguard its business. In due course, it proposes to recruit an additional independent non-executive director. The directors recognise the importance of sound corporate governance appropriate to the Group’s size and the interests of shareholders. A Group strategy review, Group risk review and Board evaluation are conducted annually.The directors support the concept of an effective Board leading and controlling the Group. The Board meets ten times a year and more frequently where business needs dictate. The Board has a formal schedule of matters reserved to it for decision, including Group strategy, acquisition policy, the approval of major capital expenditure and approval of annual budgets. The requirement for Board approval and the delegation of other Board authority is communicated throughout the Group.Executive directors’ normal retirement age is 60 and non-executive directors’ normal retirement age is 65. One-third of all directors are subject to annual reappointment by shareholders.All directors have access to the advice and services of the joint company secretary, who is also responsible for ensuring that Board procedures are followed. There is also a procedure in place for any director to take independent professional advice if necessary, at the Company’s expense.

Board committees The Company has previously established Audit and remuneration Committees. These committees comprise the Non-executive Directors, David Williams and marion Sears. A Nominations Committee has recently been formalised comprising the Non-executive Directors and Chief Executive. The Audit Committee meets at least twice a year with the Company’s external auditors, once following a review of the interim results, and on completion of the audit process, but prior to the Board of the Company approving the financial statements of the Group. It also considers the Group’s financial and accounting policies together with management reports on accounting and internal controls and will review reports presented by the external auditors and consider any other matters raised by them. The Audit Committee will invite the Executive Directors to attend as necessary to conduct its business.

10p ordinary % of shares shares in issue

UBS Global Asset management 993,155 9.3marwyn ventures Fund 1 llP 873,715 8.1Foreign & Colonial Asset management 822,837 7.7Unicorn Asset management 748,300 6.9Universities Superannuation Scheme 493,000 4.6man Financial limited 479,964 4.5

Global Reports LLC


directors’report

The remuneration Committee implements the policy for the remuneration of the Executive Directors and determines their terms and conditions including annual remuneration and incentive awards. The remuneration of the Chairman and Non-executive Director is decided by the full Board. The remuneration report on page 17 sets out the policy and its current application in respect of Directors’ remuneration.

Going concern On the basis of current financial projections and facilities available, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is appropriate to adopt the going concern basis in preparing these accounts.

Internal control The Board is responsible for maintaining a sound system of internal control to safeguard shareholders’ investment and the Group’s assets, as well as reviewing its effectiveness. The system of internal control is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can only provide reasonable and not absolute assurance against material loss and misstatement. During the year the Group undertook commercial and financial due diligence on businesses prior to their acquisition and these form the basis of risk management reviews in respect of these businesses for the initial post-acquisition period. The key control procedures operating within the Group include, but are not limited to:

• A comprehensive system of financial budgeting, forecasting and then reporting and reviewing actual monthly results for the current year against these expectations and against the results of prior years. • A system of operational and financial Key Performance Indicators (“KPI’s”), which are reviewed on a weekly and monthly basis. • Procedures for appraisal, review and authorisation of capital expenditure. • Properly authorised treasury procedures and banking arrangements. • regular review of materials and services supply commitments. • regular review of tax, insurance, and health and safety matters.

The principal financial KPI’s monitored by the Board relate to turnover, operating margins, and earnings per share. Operational KPI’s monitored by the Board, include health and safety statistics. Within Group operating subsidiaries production KPI’s appropriate to each manufacturing facility are reviewed by local senior management on a weekly and monthly basis.At this stage in the Group’s development the Board does not consider it appropriate to establish an internal audit function.

Principal risks and uncertaintiesIn the course of its normal business the Group is exposed to a range of risks and uncertainties which could impact on the results of the Group. The Directors have identified the following principal risks and uncertainties that could have the most significant impact on the Group’s long term value generation.

Food quality and safetyA major incident resulting from a health and safety failure, including for example in respect of one of our nut-free environments, could pose a risk to consumers and therefore have reputational and financial implications for the Group.The Group’s stringent approach to food quality and safety is controlled via the quality assurance procedures operated at each site. Internal systems are reviewed continuously and potential for improvement monitored. Where appropriate, additional investment is being made in the installation of x-ray machines onto a number of production lines to optimise ingredient screening efficiency and effectiveness. The Group’s factories are subject to regular internal and independent food safety and quality control audits, including those carried out by, and / or for, major customers. The Group maintains product recall insurance cover to mitigate the potential impact of such an event.

Customers and consumersThe Group operates in a highly competitive market sector and its ability to compete strongly requires an on-going commitment to marketing, product development and innovation.The Group recognises the potential risk from changing trends in consumer preferences and an increasingly health conscious public.

Raw materialsThe Group believes that the quality of its raw materials is critical to the quality of its product. The Group recognises the need to protect the environment, which, together with increasing consumer focus on organic and ‘free trade’ products, promotes the purchase of increasing proportions of raw materials that meet these criteria. The availability and resultant price levels of ingredients meeting these needs may adversely affect the margins available to the Group, subject to the ability to pass through corresponding price increases to customers.movement in commodity prices of raw materials may have a corresponding impact on finished product cost. Failure to manage the Group’s exposure to price increase may adversely affect the Group’s financial performance. The Group minimises its exposure to adverse raw material price changes by entering into forward purchases to cover known customer requirements for between six and nine months.

PeopleThe Group recognises that its employees are critical to successful delivery of service to customers. The failure to retain people of high quality would have an adverse affect on Group performance. The Group has high expectations of all staff and in return strives to provide an environment that is both challenging and rewarding.

Financial and credit risk management This is described in note 32 to the financial statements.

Supplier payment policy The Company operates only as a holding company and head office for the operating businesses; accordingly it has minimal trade creditors (30 April 2007: £70,000; 2006: £206,000) typically relating to ad hoc administration costs and professional fees, which are settled in accordance with specific terms agreed with the suppliers of these services. The Group’s policy is to comply with the terms of payment agreed with suppliers when terms of business are established.

Employees The Group operates a policy of devolved management for its operating divisions and subsidiaries. The Group believes in close consultation between employees and keeps all employees informed of matters affecting them. regular meetings are held throughout the Group between employees and senior management to encourage the development of new ideas and to enable an open exchange of views when decisions are made which affect employees’ interests. The Group gives equal opportunity to the employment of disabled persons where practicable. Every endeavour is made to ensure that disabled employees, and those who become disabled whilst in the Group’s employment, benefit from training and career development programmes in common with all employees.

Charitable donations During the year the Group’s charitable donations amounted to £10,000 (2006: £12,000). No contributions were made to any political organisation.

AuditorThe directors confirm that the auditor, Grant Thornton UK llP, has had access to all relevant information in conducting the audit. The auditor, who was appointed by the directors during the year following a routine review of audit service provision, has also indicated willingness to continue in office.A resolution for the appointment of auditor to the Group will be proposed at the forthcoming Annual General meeting.

Annual General Meeting The Annual General meeting will be held at: DlA Piper UK llP, 3 Noble Street, london EC2v 7EE on 26 September 2007. The notice of Annual General meeting and explanatory notes regarding the business to be transacted are set out on page 41 accompanying this annual report.

On behalf of the Board23 July 2007

Ian Blackburn Dale mullinsChief Executive Finance Director

remunerationreport

Remuneration Committee

The remuneration Committee comprises the Non-executive Directors, David Williams and marion Sears.

Remuneration policy

The Committee’s policy is to provide an executive remuneration structure that will attract, motivate and retain the high quality individuals who are essential for the successful development of the business over the long term. Executive remuneration aims to ensure that the Executive Directors are fairly rewarded for their performance and are incentivised to enhance value for shareholders on a continuing basis.

During the year Ian Blackburn and Clive Beecham were incentivised with a cash bonus scheme which can pay up to 30% of gross salary in the event that budgeted EPS is attained and an additional 30% may be earned on pre-determined EPS performance in excess of budget.

In February 2007 our Finance Director, Dale mullins, joined the Board. A new remuneration structure was developed to cover all Executive Directors with effect from 1 may 2007. This includes a share based long-Term Incentive Plan (“lTIP”) as was announced on 9 may 2007.

The new structure has three elements of remuneration:• Gross salary • Annual bonus• lTIP

The Committee undertakes the determination of the Executive Directors’ annual remuneration packages, and the performance measurement for the purpose of the annual bonus and lTIP.

Non-executive Directors’ remuneration is determined by the Board as a whole. The Non-executive Directors do not participate in bonuses or any incentive plan.

Gross salary

Prior to the beginning of each financial year the remuneration Committee sets the gross salaries of Executive Directors. The Committee takes into account the levels of salaries of Directors in similar sized public companies and reviews published research and surveys.

The Executive determines the allocation between salary, pension contribution and car allowance. Executives are also entitled to participate in Group-sponsored private health cover and life assurance arrangements.

Annual bonus

This is performance-related and represents a short-term incentive to achieve or exceed the following year’s budgeted diluted EPS. However, the Committee will also take into account Director’s performance against personal objectives set for the year. It is a cash bonus that is paid annually after the year-end results are audited. 30% of gross salary is paid for achieving the budgeted diluted EPS. Up to a further 30% may be paid for performance in excess of the budgeted diluted EPS.

LTIP

This is a performance-related long-term incentive to achieve consistent above-sector EPS growth. It is a three-year plan, which will be administered by the Employee Benefit Trust that grants conditional awards of free shares to Group Executives at the start of the plan period. The awards vest according to the performance of diluted EPS over the three year period.

Under the first (2007) lTIP, conditional awards equivalent to 100% of basic salary will be made following the announcement of the 2006/07 preliminary results. These will vest after the publication of the Company’s results for the year ending 30 April 2010, subject to the satisfaction of the performance criteria that are based on compound annual growth in diluted EPS over the plan period. The maximum award will vest if the compound annual growth in diluted EPS reaches 12.5% per annum.

Service contracts

It is the Company’s policy that the service contracts for Executive Directors have no fixed term and that the notice period for termination is not greater than 12 months. Payments on termination are restricted to a maximum of the value of salary for the notice period.

The Chairman has a letter of appointment for an initial period of one year with a provision for termination of twelve months’ notice from either party. The Senior Non-executive Director has a letter of appointment for an initial period of three years with a provision for termination of one months’ notice from either party.

Performance graph

The graph below shows the Company’s performance since flotation, measured by total shareholder return (“TSr”) with dividends re-invested, compared with that for the FTSE All Share index and for the FTSE AIm All Share index.

19/04/06

Zetar Total Return

Zetar plc Ftse aim all share and Ftse all share tsR Rebased

FTSE All Share Total Return

Note- Total Share Return for Net dividend on pay date

Reba

se to

100

FTSE AIM All Share Total Return

70

80

90

100

110

120

130

140

150

160

170

19/02/07 19/04/07 19/06/0719/12/0619/10/0619/08/0619/06/06

Global Reports LLC


statement of directors’responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare financial statements in accordance with United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The financial statements are required by law to give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial statements, the directors are required to:

• select suitable accounting policies and then apply them consistently

• make judgments and estimates that are reasonable and prudent

• state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business.

The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In so far as the directors are aware:

• there is no relevant audit information of which the Company’s auditor is unaware; and

• the directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

The directors’ are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website. legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

remunerationreport

Taxable Pension Pro forma Salary benefits contributions Bonus 2007 Total 2006 Total £’000 £’000 £’000 £’000 £’000 £’000

executive DirectorsI.m. Blackburn 110 - 160 100 370 240C.H.Beecham1 185 2 - 67 254 180A.D. mullins2 33 - 2 - 35 -

Non-executive Directors D.J.Williams 45 - - - 45 30m.I.J.Watts3 5 - - - 5 20m.J.Sears3 19 - - - 19 -

Total 397 2 162 167 728 470

Directors’ remuneration Details of individual Directors’ remuneration for the years ended 30 April 2007 and 2006 were as follows:

Notes:1. CliveBeechamandtrustsofwhichheisatrusteeand/orbeneficiaryreceivedatotalof£5,353,000(includinginterestof£529,000)fromtheredemptionof‘B’and ‘A’loannotesandaccruedintereston25September2006and20April2007,respectively.TheKinnertonpensionFund,ofwhichCliveBeechamisabeneficiary, waspaid£97,000rentforlandandbuildingsusedbytheKinnertonGroup.2. DalemullinswasappointedtotheBoardon1February20073. markWattsresignedfromtheBoardandmarionSearsjoinedtheBoardon27July2006DavidWilliamsandmarkWattsaredirectorsofmarwynpartnersLimitedwhichwaspaid£60,000intheyearended30April2007(2006:£60,000)forprovidingaccommodation,administrativeandsecretarialservicestotheCompany.Inadditiontotheirremunerationsetoutinthetableabove,share-basedpaymentshavebeenchargedtotheprofitandlossaccountinrespectofthenon-vestedEmIshareoptionsheldbyIanBlackburnandCliveBeechamof£26,000and£19,000,respectively(2006:£26,000and£18,000,respectively).

Exercise Date of Exercisable Exercisable Scheme 30 April 2007 30 April 2006 price grant from until

I.m. Blackburn EmI 49,999 49,999 £2.00 18.3.05 18.3.08 18.3.15 EBT 1,303,791 1,303,791 £2.00 18.4.05 18.4.05 13.4.12

C.H. Beecham EmI 49,999 49,999 £2.00 20.5.05 20.5.08 20.5.15 EBT 161,819 161,819 £2.00 18.4.05 18.4.05 13.4.12

A.D. mullins EBT 10,000 - £2.00 1.2.07 1.2.09 13.4.12

DavidWilliamsisadirectorofmarwynInvestmentsGroupLimitedwhichholdswarrantsover439,930ordinaryshares(2006:460,473)asdetailedinnote21.20,543warrantswereexercisedintheyear.Themarketpriceoftheordinarysharesat30April2007was£5.85andtherangeduringtheyearwas£3.85to£5.90.Directors’ interestsThe Directors had the following interests in the shares of the Company:

30 April 2007 30 April 2006 10p ordinary shares % shares issued 10p ordinary shares

executiveI.m. Blackburn1 328,453 3.1 320,041C.H. Beecham2 853,924 8.0 797,402A.D. mullins 3,500 - -

Non-executiveD.J. Williams3 262,000 2.4 262,000m.J.Sears 15,000 0.1 10,000

Notes:1. OfIanBlackburn’sinterests,126,041ordinarysharesareownedbyhiswife,JBlackburn,and8,412ordinarysharesareheldbyIanBlackburn’sSIpp.2. OfCliveBeecham’sinterests,302,316ordinarysharesareheldbyTheCliveBeechamKinnertonTrust,49,024ordinarysharesareheldbyTherobertBeecham KinnertonTrustand116,522ordinarysharesareheldbyTheKinnertonpensionScheme,allofwhichCliveBeechamisatrusteeand/orbeneficiary.3. DavidWilliamsisadirectorofmarwynGroupLimited,whichat30April2007,throughmarwynventuresFundLLp,held873,715(2006:650,715)ordinaryshares.

APPROVAL This report was approved by the Board of Directors on 23 July 2007 and signed on its behalf by:

Directors’ beneficial interests in share options at the beginning and the end of the year were as follows:

Share optionsShare options were granted to Ian Blackburn and Clive Beecham in 2005 upon the acquisition of Kinnerton. Since then no options have been granted to directors other than to allocate 10,000 of the existing EBT options to

Dale mullins on his appointment to the Board. These were issued partly to compensate for forfeiting rights from his previous employment, and are conditional on his continuing to be employed by Zetar for two years.

Marion Sears SeniorIndependentNon-executiveDirector

Global Reports LLC


report of the independent auditorto the members of Zetar Plc

We have audited the group and parent company financial statements (the ‘’financial statements’’) of Zetar Plc for the year ended 30 April 2007 which comprise the consolidated profit and loss account, balance sheets, consolidated cash flow, reconciliation of net cash flow to movement in net debt, the statement of total recognised gains and losses and notes 1 to 34. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the company’s members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditors

The directors’ responsibilities for preparing the Annual report and the financial statements in accordance with United Kingdom law and Accounting standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of directors’ responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and whether the financial statements have been properly prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the directors’ report is consistent with the financial statements. The information given in the directors’ report includes that specific information presented in the operational review and the financial review that is cross-referred from the principal activities and business review section of the directors’ report.

In addition we report to you if, in our opinion, the company has not kept proper accounting records, if we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors’ remuneration and other transactions is not disclosed.

We read other information contained in the annual report and consider whether it is consistent with the audited financial statements. The other information comprises only the directors’ report, the remuneration report, the chairman’s statement, the operational review and the financial review. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the group’s and company’s circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

• the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice, of the state of the group’s and parent company’s affairs as at 30 April 2007 and of the group’s profit for the year then ended;

• the financial statements have been properly prepared in accordance with the Companies Act 1985; and

• the information given in the Directors’ report is consistent with the financial statements.

GRANT THORNTON UK LLP LondonREGISTERED AUDITOR, CHARTERED ACCOUNTANTS 23 July 2007

consolidated profit and loss accountfor the year ended 30 April 2007

* restated for the implementation of FrS20 ‘Share-based payment’ (note 8)Pro-forma information is unaudited - see note 1(a).

The notes on pages 24 to 39 form an integral part of these financial statements.

Audited Audited Pro-forma 72 weeks Year ended 30 April 2007 Year ended 30 April 2006* ended 30 April 2006*

Before Before Goodwill goodwill Goodwill goodwill amortisation, amortisation amortisation amortisation exceptional

and FrS20 and FrS20 and FrS20 items and £000’s Notes costs costs Total costs FrS20 costs Total Total

turnover Continuing operations 74,005 - 74,005 57,864 - 57,864 59,124

- Acquired operations 20,940 - 20,940 - - - -

2 94,945 - 94,945 57,864 - 57,864 59,124 Cost of sales (68,862) - (68,862) (41,639) - (41,639) (42,584) Gross profit 26,083 - 26,083 16,225 - 16,225 16,540 Distribution costs (4,175) - (4,175) (2,540) - (2,540) (2,597)Administrative expenses 3 (14,265) (1,620) (15,885) (8,752) (1,043) (9,795) (10,149) Operating profitContinuing operations 6,234 (1,220) 5,014 4,933 (1,043) 3,890 3,794

- Acquired operations 1,409 (400) 1,009 - - - -

7,643 (1,620) 6,023 4,933 (1,043) 3,890 3,794 Interest receivable 6 90 - 90 100 - 100 121Interest payable 6 (1,129) - (1,129) (1,115) (635) (1,750) (1,781) Profit on ordinary activities before taxation 4 6,604 (1,620) 4,984 3,918 (1,678) 2,240 2,134 Tax on profit on ordinary activities 9 (1,877) 75 (1,802) (1,214) 262 (952) (983) Profit on ordinary activities 4,727 (1,545) 3,182 2,704 (1,416) 1,288 1,151

Equity minority interest 24 (2) - (2) (8) - (8) (8) Profit for the financial period 22 4,725 (1,545) 3,180 2,696 (1,416) 1,280 1,143 Basic earnings per share 10 47.2p 31.8p 39.3p 18.6p 21.5pDiluted earnings per share 10 40.5p 27.7p 33.3p 17.0p 19.8p

Global Reports LLC


consolidated cash flow and statement of total recognised gains and lossesfor the year ended 30 April 2007

balance sheetsat 30 April 2007

* restated for the implementation of FrS20 ‘Share-based payment’ (note 8) and re-allocation between reserves (note 22).


Approved by the Board on 23 July 2007

Ian Blackburn Dale mullinsChief Executive Finance Director

Audited Pro-forma Audited Year ended Year ended 72 weeks ended £000’s Note 30 April 2007 30 April 2006* 30 April 2006

Net cash inflow from operating activities 25 5,814 5,328 5,294

returns on investments and servicing of finance 26 (1,364) (896) (1,296)

Taxation 26 (1,425) (333) (333)

Capital expenditure 26 (1,862) (1,328) (1,328)

Acquisitions and disposals 26 (10,999) (5,157) (15,951)

Cash outflow before financing (9,836) (2,386) (13,614)

Financing 26 9,845 (2,396) 14,522

Increase / (decrease) in cash in the period 9 (4,782) 908

Consolidated cash flow Group Company As at As at As at As at£000’s Note 30 April 2007 30 April 2006* 30 April 2007 30 April 2006*

Fixed assetsIntangible assets 12 28,122 18,920 - -Tangible assets 13 10,747 9,023 - -Investments 14 - - 48,206 37,723

38,869 27,943 48,206 37,723Current assetsStocks and work in progress 15 9,060 4,380 - -Debtors 16 16,857 10,886 2,810 1,650Cash at bank and in hand 3,712 2,925 806 288

29,629 18,191 3,616 1,938

Creditors: Amounts falling due within one year 17 (27,843) (22,043) (8,092) (18,997) Net current assets / (liabilities) 1,786 (3,852) (4,476) (17,059)

total assets less current liabilities 40,655 24,091 43,730 20,664

Creditors: Amounts falling due after more than one year 18 (6,320) (6,987) (1,671) (6,312) Provision for liabilities 20 (2,541) (1,216) (800) (1,000) Net assets 31,794 15,888 41,259 13,352

Capital and reservesCalled up share capital 21 1,073 750 1,073 750Share premium account 22 22,673 12,004 22,673 12,004merger reserve 22 3,229 1,738 3,229 1,738Profit and loss account 22 4,819 1,390 14,284 (1,140)

total equity shareholders’ funds 23 31,794 15,882 41,259 13,352

minority interest 24 - 6 - -

total capital employed 31,794 15,888 41,259 13,352


Increase / (decrease) cash 9 (4,782) 908

Cash outflow / (inflow) from movement in debt financing 735 4,228 (2,272)

Cash outflow from movement in lease financing 375 412 412

movement in net debt arising from cash flows 1,119 (142) (952)

Other non-cash changes (1,686) (2,782) (6,663)

Debt acquired with subsidiary (244) (322) (1,390)

Net debt brought forward (9,005) (5,759) -

Net debt carried forward 27 (9,816) (9,005) (9,005)

reconciliation of net cash flow to movement in net debt


Profit for the financial year 3,180 1,280 1,143

Prior year adjustment (as explained in note 22) 74 3 -

Total recognised gains and losses since last financial statements 3,254 1,283 1,143

Consolidated statement of total recognised gains and losses

* Pro-forma information is unaudited - see note 1(a)


Global Reports LLC


(m) Finance costs Finance costs relate to arrangement of bank facilities and are written off over the period of the facility. (n) Foreign exchange Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction or, if hedged, at the forward contract rate. monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date or, if appropriate, at the forward contract rate. The results of overseas operations are translated at the average rates of exchange during the period and their balance sheets at the rates ruling at the balance sheet date. All other exchange differences are included in the profit and loss account. (o) Financial instruments The Group does not hold or issue derivative financial instruments for trading purposes. Derivatives used include forward currency contracts, currency options and interest rate swaps. Debt instruments are recorded at the proceeds received, net of direct issue costs. Issue costs are amortised over the period of the debt instrument. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs. (p) share-based payment ‘FRs 20’The Group has applied the requirements of FrS 20 ‘Share-based payment’. In accordance with the transitional provisions, FrS 20 has been applied to all non-vested options as at 1 may 2006. This has resulted in a prior year adjustment restating the results and net assets for the period ended 30 April 2006 as set out in note 22.The group issues equity-settled payments to certain employees. Equity-settled payments were also made to advisors in connection with the establishment of the Company. Equity-settled share-based payments are measured at fair value (excluding the effect of non market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of non-market based vesting conditions. Amounts charged against current year profits are credited to equity via the profit and loss account reserve. In accordance with UITF Abstract 44, share-based payments in respect of employees of subsidiary undertakings are treated as capital contributions by the Company, thereby increasing the cost of investment, the effect of which is eliminated on consolidation in the Group financial statements. Fair value is measured using the Black-Schöles or monte Carlo pricing models, as set out in note 8.

2. segmental information With the acquisition of Humdinger limited in the year, the Directors consider the Group now operates two segments, being Confectionery and Natural & Premium Snacks. The Natural & Premium Snacks division consists of readifoods limited and Humdinger limited, with other operating Group companies included within the Confectionery division.

notes to the financial statementsfor the year ended 30 April 2007

1. accounting policies In preparing the financial statements for the current year the following accounting policies have been used consistently in dealing with items which are considered material to the Group’s affairs. The Group has adopted for the first time Financial reporting Standard 20 ‘Share-based payment’. (a) Basis of preparation of financial statements The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. The Directors have performed a review of the required cash flow over the twelve months from the date of approval of these accounts and are satisfied that the Group has sufficient finances to continue as a going concern.The pro-forma results for the year ended 30 April 2006 have been prepared on a basis consistent with the audited information. The pro-forma results comprise those of Zetar International limited (formerly Kinnerton Group limited) and its subsidiary undertakings for that year together with the results of readifoods limited for one month from the date of its acquisition.(b) Basis of consolidation The Group financial statements consolidate the accounts of the Company and its subsidiary undertakings drawn up to 30 April 2007 using acquisition accounting. The results of the businesses acquired during the period have been included from their date of acquisition. Profits or losses on intra-group transactions are eliminated in full. On acquisition of a subsidiary, all of the subsidiary assets and liabilities which exist at the date of acquisition are recorded at their fair values reflecting their condition at that date. (c) turnover Turnover represents amounts receivable for goods and services supplied by the Group during the period, net of sales rebates, discounts, value added tax and other taxes directly attributable to turnover and after eliminating sales within the Group. Turnover is recognised when the outcome of a transaction can be measured reliably and when it is probable that the economic benefits associated with the transaction will flow to the Group. Turnover is recognised on the following basis:Sale of goodsSales of goods are recognised as turnover on transfer of the risks and rewards of ownership, which generally coincides with the time when the merchandise is delivered to customers and title passing.Sales rebates and discountsSales rebates and discount reserves are established based on management’s best estimate of the amounts necessary to meet claims by the Group’s customers in respect of these rebates and discounts. The provision is made at the time of sale and released, if unutilised, after assessment that the likelihood of such a claim being made has become remote.(d) Goodwill Goodwill arising on consolidation, represents the excess of the fair value of the consideration given over the fair values of the identifiable net assets acquired and is capitalised and amortised on a straight-line basis over its estimated useful economic life. The useful economic life of the goodwill is 20 years based on the directors’ assessment of the income streams of those businesses. Goodwill is reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired. (e) Development costs Development costs are written off in the year of expenditure. (f) tangible fixed assets Tangible fixed assets are stated at cost less depreciation. Depreciation is provided at a variety of rates specific to the assets held by each company within the Group.The rates are calculated to write off the cost of fixed assets, less their estimated residual value, over their expected useful lives on the following bases:

Freehold buildings 2% straight lineleasehold improvements over the term of the lease / 10% straight linePlant and machinery 10% to 33% straight line / reducing balanceFixtures, fittings and office and computer equipment 10% to 33% straight line / reducing balancemotor vehicles 20% to 25% straight line / reducing balance Freehold land is not depreciated.

(g) investments Investments are stated at cost less provision for impairment. (h) Operating leases rentals under operating leases are charged on a straight line basis over the lease term. (i) Finance leases and hire purchase Assets held under finance leases and other similar contracts which confer rights and obligations similar to those attached to owned assets are treated as if they have been purchased outright at the present value of the rent payable over the period of the agreements. The corresponding obligations under these agreements are included in creditors. The finance element of the rent payable is charged to the profit and loss account so as to produce a constant rate of charge on the outstanding balance in each period. (j) stocks and work in progress Stocks and work in progress are stated at the lower of cost and net realisable value. Cost includes materials, direct labour and an attributable proportion of manufacturing overheads based on normal levels of activity. Net realisable value is based on estimated selling price, less further costs expected to be incurred to completion and disposal. Provision is made for obsolete, slow-moving or defective items where appropriate. (k) Deferred taxation Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in these accounts. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is no commitment to sell the assets. Deferred tax assets are recognised to the extent it is regarded as more likely than not that they will be recovered. Deferred tax is recognised in respect of the retained earnings of overseas subsidiaries and associated companies only to the extent that, at the balance sheet date, dividends have been accrued as receivable or a binding agreement to distribute past earnings in the future has been entered into by the subsidiary or associated company. Deferred tax is measured on an undiscounted basis using average rates of tax that have been enacted or substantively enacted by the balance sheet date. (l) Pension costs The Group operates a range of defined contribution pension schemes and makes specific payment into a small number of directors’ and senior managers’ personal pension accounts. Contributions are charged to the profit and loss account as they become payable. The Group also operates a range of Stakeholder Pension Schemes to which the Group does not contribute.

Audited Pro-forma Audited Year ended Year ended 72 weeks ended £000’s 30 April 2007 30 April 2006 30 April 2006

Business segmentsturnover Confectionery 61,417 57,063 58,323Natural & Premium Snacks 33,528 801 801

94,945 57,864 59,124 Operating profitConfectionery 4,186 3,859 3,763Natural & Premium Snacks 1,837 31 31

6,023 3,890 3,794 segment net assetsConfectionery 24,573 20,161 20,161Natural & Premium Snacks 17,037 4,732 4,732Unallocated net debt (9,816) (9,005) (9,005)

31,794 15,888 15,888 Geographical segments

turnover by destinationUK 88,164 53,201 54,461Europe 2,570 1,589 1,589Australasia 2,450 2,396 2,396rest of the world 1,761 678 678

94,945 57,864 59,124 turnover by originUK 92,495 55,468 56,728Australasia 2,450 2,396 2,396

94,945 57,864 59,124


Global Reports LLC


7. employees and directors The staff costs including directors’ remuneration were as follows:

Pro-forma Audited Audited Year ended 72 weeks ended Year ended 30 April 2006 30 April 2006£000’s 30 April 2007 (as restated) (as restated)

Wages and salaries 19,359 14,594 15,133Social security costs 1,534 1,354 1,414Other pension costs 426 179 185

21,319 16,127 16,732

The average number of employees (including directors) employed by the Group during the year was:

Audited Pro-forma Audited Year ended Year ended 72 weeks ended 30 April 2007 30 April 2006 30 April 2006

Production 796 620 468Sales and administration 158 128 97

954 748 565

8. share-based paymentShare-payments have been charged against profit as follows:

3. Cost of sales, gross profit and other operating expensesThe goodwill and share-based payment charges included in the profit and loss account are as follows:

In relation to the acquisition of Humdinger limited and Horsley, Hick & Flower limited, acquired operations in 2007 include cost of sales of £14,808,000, gross profit £6,132,000, distribution costs £935,000 and administrative expenses £4,188,000.

4. Profit on ordinary activities before taxationThe Group’s profit on ordinary activities before taxation is stated after charging the following:

Other services provided by the auditors totalling £74,000 (2006: £182,000) have been capitalised within cost of investment, as these relate to the acquisition of subsidiary undertakings.

5. Reconciliation of eBitDa

EBITDA represents earnings before interest, taxation, depreciation, amortisation and share-based payment charges.

6. Net interest payable

*Non-recurring costs comprise bank facility set up and termination fees incurred with the Group’s previous bankers totalling £635,000, all of which were charged to the profit and loss account in the year ended 30 April 2006.


Goodwill amortisation 1,371 805 805Equity-settled share-based payment charge (note 8) 249 238 247

1,620 1,043 1,052


Depreciation of tangible fixed assets and trademarks – owned 1,407 1,424 1,424Depreciation of tangible fixed assets – leased 244 173 173Amortisation of goodwill 1,371 805 805loss on disposal of fixed assets 17 17 17rentals payable in respect of operating leases:

- plant & machinery 146 95 95- other 431 307 307

Hire of plant and machinery 6 33 33 Auditor’s remuneration

Audit of Company financial statements 12 22 22 Audit of subsidiary undertakings 54 6 6Taxation services 17 2 2Other services 7 12 12

Total non-audit services 78 20 20


Operating profit (excluding amortisation of goodwill and FrS20 costs) 7,643 4,933 4,846Depreciation of tangible assets and trademarks 1,651 1,597 1,597

eBitDa 9,294 6,530 6,443


Interest payable and amortisation of issue costs (660) (612) (630)Interest on finance leases and similar charges (64) (143) (143)Interest payable on loan notes (405) (360) (373)

Total interest payable excluding non-recurring costs (1,129) (1,115) (1,146)

Non-recurring charges payable on bank loans and overdrafts* - (635) (635)

Total interest and charges payable (1,129) (1,750) (1,781)

Interest receivable on deposits at short call 90 100 121



The remuneration in respect of directors was as follows:


Emoluments 566 450 639Share-based payments 45 44 47Pension contributions to money purchase pension schemes 162 20 20

773 514 706

During the year two directors (2006: one director) participated in money purchase pension schemes

The amounts set out above include remuneration in respect of the highest paid director as follows:


Emoluments 210 220 389Share-based payments 26 26 29Pension contributions to money purchase pension schemes 160 20 20

396 266 438


Share-based payments (249) (238) (247)Deferred tax effect 75 71 74

Decrease in profit (174) (167) (173)

Details of Group and Company share option and warrant arrangements that give rise to equity-settled share-based payment charges are as follows:

Enterprise Management Incentive (EMI) schemeUnder the EmI scheme established in march 2005 employees (including directors) may be offered options to acquire Ordinary Shares in the Company. Due principally to the growth in size of the Group, the tax advantages for EmI option holders are no longer available; accordingly no further EmI options are expected to be granted. Options are exercisable at prices set out in note 21. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant the options expire. Options are forfeited if the employee leaves the Group before the options vest.

‘B’ WarrantsIn April 2005 the Company also granted to marwyn Investments Group 184,189 warrants giving holders rights to acquire Ordinary Shares in the Company. These warrants have a three year vesting period ending 13 April 2008 and the rights lapse if not exercised before 13 April 2012. The fair value of the services provided cannot be established reliably; accordingly the warrants themselves have been valued using the monte Carlo pricing model.

Global Reports LLC


Year ended 30 April 2007 Year ended 30 April 2006 Weighted Per share Weighted Per share Earnings average amount Earnings average amount £000’s no. of shares (pence) £000’s no. of shares (pence) Basic earnings per share 3,180 10,015,526 31.8p 1,280 6,863,813 18.6pDiluted earnings per share 3,364 12,127,716 27.7p 1,470 8,656,814 17.0p Adjusted basic earnings per share 4,725 10,015,526 47.2p 2,696 6,863,813 39.3pAdjusted diluted earnings per share 4,909 12,127,716 40.5p 2,886 8,656,814 33.3p Underlying diluted earnings per share 4,725 11,397,782 41.5p 2,696 7,543,168 35.7p

reconciliations between the various weighted average numbers of shares shown above are as follows:

Year ended 30 April 2007 Year ended 30 April 2006 Basic Underlying Diluted Basic Underlying Diluted earnings diluted earnings earnings earnings diluted earnings earnings per share per share per share per share per share per share

Weighted average number of shares 10,015,526 10,015,526 10,015,526 6,863,813 6,863,813 6,863,813Weighted average number of options (vested) - 1,110,057 1,110,057 - 656,803 656,803Weighted average number of options (non-vested) - 272,199 272,199 - 22,552 22,552Weighted average number of loan notes - - 729,934 - - 1,113,646

Weighted average number of shares used forearnings per share 10,015,526 11,397,782 12,127,716 6,863,813 7,543,168 8,656,814

11. Purchase of subsidiary undertakings and businesses All acquisitions have been accounted for using the acquisition method of accounting, and goodwill arising on consolidation has been capitalised and will be written off over 20 years. The following tables set out the book values of the identifiable assets and liabilities acquired and their fair value to the Group. humdinger limitedOn 18 July 2006 the Group acquired the entire share capital of Humdinger limited for up to £12,975,000. The initial consideration of £10,000,000 was paid on 18 July 2006, comprising £8,772,000 in cash / loan notes and 305,701 Zetar Plc ordinary shares at a value of £1,228,000. £300,000 has been provided in respect of the maximum amount payable (£2,975,000), which is dependent upon the operating profits in the two years ending 30 September 2008.

£000’s Book value Fair value adjustment Provisional fair value

Net assets acquired: Intangible assets 346 (346) -Tangible fixed assets 1,237 - 1,237Stock 3,399 - 3,399Debtors 3,915 (100) 3,815Bank overdraft (817) - (817)Creditors less than one year (5,309) 225 (5,084)Creditors greater than one year (177) - (177)Corporation tax (375) - (375)Deferred tax (85) - (85)

2,134 (221) 1,913Goodwill 8,737

Consideration payable 10,650

9. taxation


Current corporation tax Current corporation tax charge 1,510 1,009 1,042Adjustments in respect of previous years (88) - -

1,422 1,009 1,042

Deferred tax 380 (57) (59)

Tax on profit on ordinary activities 1,802 952 983

The corporation tax charged for the year differs from the standard rate of United Kingdom corporation tax of 30% as explained below.


Profit on ordinary activities before tax 4,984 2,240 2,134

Profit on ordinary activities multiplied by the standard rate of corporation tax in the UK of 30% 1,495 672 640

effect of:Expenses and other non-deductible items 467 290 302Depreciation (less than) / in excess of capital allowances (54) 55 56Other timing differences (346) (8) 44Utilisation of tax losses (52) - -Adjustments to tax charge in respect of prior periods (88) - -

1,422 1,009 1,042

10. earnings per share

Audited Pro-forma Audited Year ended 30 April 2007 Year ended 30 April 2006 72 weeks ended 30 April 2006 WAEP WAEP WAEP No £ No £ No £

Outstanding at the beginning of the period 552,471 2.03 234,188 2.00 - -Granted during the period - - 318,283 2.05 552,471 2.03

Outstanding at the end of the period 552,471 2.03 552,471 2.03 552,471 2.03

None of these options were exercisable at the end of the year. Full details of all share options / warrants, including movements during the year and numbers exercisable at year end are set out in note 21.

The fair values have been calculated using the Black-Schöles pricing model for the options granted under the EmI scheme and using the monte Carlo pricing model for the ‘B’ warrants. The principal assumptions input into each model were as follows:

The volatility of the Company’s share price on each date of grant was calculated as the average of the standard deviations of daily continuously compounded returns on the shares of companies with similar corporate attributes to the Company, calculated over three years leading up to the date of the grant. This method estimates volatility of the Company’s share price over a period commensurate with the options’ expected life.The expected life of the share options and warrants under consideration is assumed to be five years. The assumption takes into consideration the effects of non-transferability, exercise restrictions and behavioural considerations.The risk free rate is the yield to maturity on the date of grant of a UK Gilt Strip with term to maturity equal to the expected life of the options or warrants.



Details of the number of share options / warrants, to which the share-based payment charge relates, outstanding during the year and their weighted average exercise prices (WAEP) are as follows:

Weighted Weighted average expected average fair Number share price exercise expected expected Risk free dividend value atDate of grant granted at grant price volatility life rate yield grant date No. £ £ % Years % % £

Black-schöles pricing model18 march 2005 49,999 3.05 2.00 28.49 5 4.84 - 1.5820 may 2005 299,999 2.80 2.00 28.25 5 4.39 - 1.323 January 2006 18,284 2.95 2.95 25.87 5 4.15 - 0.92

monte Carlo pricing model13 April 2005 184,189 3.18 2.00 28.53 5 4.68 - 1.69 Basic earnings per share is calculated on the basis of profit for the year after tax and minority interest divided by the weighted average number of shares of the Company.

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all potentially dilutive ordinary shares. Potentially dilutive ordinary shares for the Company arise from share options, warrants and convertible loan notes. An adjusted basic earnings per share and an adjusted diluted earnings per share, which exclude goodwill amortisation, exceptional items and share-based payment charges, have also been calculated as in the opinion of the Directors this allows shareholders to gain a clearer understanding of the sustainable trading performance of the Group.To further clarify the understanding of the Group’s sustainable performance and allow for more appropriate comparison with future results, an underlying diluted earnings per share, which excludes the theoretically dilutive effect of loan notes being converted, has also been included. In the Directors’ opinion, the inclusion of dilution as a result of loan note conversion does not reflect the Group’s sustainable performance as under the terms of the notes it was only a remote possibility that conversion would occur in the normal course of the Group’s business. Furthermore, the loan notes concerned were redeemed in full in April 2007, such that conversion can never in fact occur.The earnings used in the basic earnings per share and underlying diluted earnings per share calculations are the reported profits for the financial period in the consolidated profit and loss account. The earnings used for diluted earnings per share are after adding back the interest payable on convertible loan notes (net of tax) of £184,000 (2006: £190,000) to the earnings base.The basic earnings per share for the 72 weeks ended 30 April 2006 of 21.5p, is calculated on the basis of the profit after tax and minority interest of £1,143,000 divided by the weighted average number of shares in issue for the 72 weeks ended 30 April 2006 of 5,316,308. The diluted earnings per share of 19.8p, is calculated on the assumption all options granted were exercised, giving rise to a total weighted average of ordinary shares in issue of 5,774,727 (after the dilutive effect of vested options of 458,419). Non-vested options and convertible loan notes were excluded as they had an anti-dilutive effect.

Fair value adjustments to tangible assets reflect the write off of goodwill relating to a company purchase, to debtors reflect a doubtful debt of £100,000 and to creditors reflect £225,000 of deferred consideration no longer payable.

Global Reports LLC



12. intangible assets

£000’s Trademarks Goodwill arising on consolidation Total

CostAt 1 may 2006 3 19,722 19,725Acquisition of subsidiary undertakings - 10,860 10,860Adjustment to deferred consideration payable from previous year - (286) (286)

At 30 April 2007 3 30,296 30,299

amortisationAt 1 may 2006 - (805) (805)Charge for the year (1) (1,371) (1,372)

At 30 April 2007 (1) (2,176) (2,177)

Net book valueAt 30 April 2006 3 18,917 18,920At 30 April 2007 2 28,120 28,122

13. tangible fixed assets

The net book value of Group land and buildings comprise:

The net book value of the Group’s fixed assets includes an asset held under plant and machinery which is subject to a chattel mortgage. The net book value of assets held under finance leases and hire purchase or similar contracts, as at 30 April 2007 is £1,419,000 (2006: £1,181,000)


Humdinger limited generated a net profit after tax of £866,000 for the financial year ended 30 April 2007 (£535,000 for the 7 months ended 30 April 2006).

horsley, hick & Flower limited

On 23 October 2006 the Group acquired the entire share capital of Horsley, Hick & Flower limited for up to £2,250,000. The initial consideration of £1,200,000 was satisfied by the payment of £900,000 in cash and the issue of 66,964 Zetar Plc ordinary shares at a value of £300,000. A further £1,050,000 is payable dependent upon the operating profits in the two years ending 30 April 2009.

£000’s Book value Fair value adjustment Provisional fair value

Net assets acquired: Tangible fixed assets 292 - 292Stock 347 - 347Debtors 778 - 778Bank overdraft (400) - (400)Creditors less than one year (706) - (706)Creditors greater than one year (67) - (67)Corporation tax (57) - (57)Deferred tax (10) - (10)

177 - 177Goodwill 2,123

Consideration payable 2,300

land and Plant and Fixtures motor£000’s Buildings machinery and fittings vehicles Total

CostAt 1 may 2006 2,521 7,554 526 19 10,620Acquisition of subsidiary undertakings 48 1,357 124 - 1,529Additions 201 1,487 214 - 1,902Disposals (111) (352) (150) - (613)

At 30 April 2007 2,659 10,046 714 19 13,438

accumulated depreciationAt 1 may 2006 (143) (1,275) (179) - (1,597)Disposals 110 298 148 - 556Charge for the year (103) (1,367) (175) (5) (1,650)

At 30 April 2007 (136) (2,344) (206) (5) (2,691)

Net book valueAt 30 April 2006 2,378 6,279 347 19 9,023At 30 April 2007 2,523 7,702 508 14 10,747

£000’s As at 30 April 2007 As at 30 April 2006

Freehold 2,477 2,328Short leasehold 46 50

2,523 2,378

£000’s

Cash 8,482Shares in Zetar Plc 1,228Secured loan notes 290Conditional deferred consideration 300

Consideration before fees 10,300Fees 350

10,650

Below are extracts from the profit and loss account of Humdinger limited from 1 April 2006 to the date of acquisition on 18 July 2006.

£000’s

Turnover 5,026Operating profit 268Net interest payable (17)Profit before tax 251Taxation (75)

Profit for financial period 176

£000’s

Cash 900Shares in Zetar Plc 300Conditional deferred consideration 1,050

Consideration before fees 2,250Fees 50

2,300

£000’s

Turnover 1,954Operating profit 193Net interest receivable (4)Profit before tax 189Taxation (55)

Profit for financial period 134

Below are extracts from the profit and loss account of Horsley, Hick & Flower limited from 1 January 2006 to the date of acquisition on 22 October 2006.

Horsley, Hick & Flower limited generated a net profit after tax of £217,000 for the 16 months to 30 April 2007 (£82,000 for the year ended 31 December 2005).The subsidiary undertakings acquired during the year made the following contributions to, and utilisations of, Group cash flow.

£000’s

Net cash inflow from operating activities 37returns on investment and servicing of finance (107)Taxation (254)Capital expenditure and financial investment (130)Financing (130)

Decrease in cash in the period within subsidiary undertakings acquired (584)

satisfied by:

satisfied by:

Global Reports LLC


18. Creditors: amounts falling due after more than one year

19. Bank loans and facilitiesBorrowings are repayable as follows:

The above borrowings are secured on the assets of the Group.

At 30 April 2007 the Group had bank facilities of revolving credit / overdraft facilities with Barclays Bank PlC of £15,000,000 (2006: £15,000,000) together with a £3,930,000 (2006: £10,000,000) acquisition term loan facility. At 30 April 2007 the Group had drawn down £2,795,000 of its available revolving credit / overdraft facility and £3,930,000 of its acquisition term loan facility of which £232,000 has been repaid. The Group also has a fully utilised £4,000,000 five year asset-backed term loan.

The Company acquired 100% of the ordinary share capital of Humdinger limited on 18 July 2006 (see note 11).

As a result of a reorganisation of the Group, the Company acquired 100% of the ordinary share capital of Kinnerton (Confectionery) Company limited from its wholly owned subsidiary undertaking, Zetar International limited, for consideration of £28.5m.

The parent company and the Group have investments in the following subsidiary undertakings, all of which are wholly owned.

15. stocks and work in progress

* Directly owned by parent company

16. Debtors

As at 30 April 2007 As at 30 April 2006 As at 30 April 2007 As at 30 April 2006£000’s Group Group Company Company

Due within one year:Trade debtors 15,362 10,171 - -Amounts due from subsidiary undertakings - - 1,989 1300Other debtors 203 33 - -Corporation tax recoverable - - 446 292Prepayments and accrued income 1,292 682 295 17

16,857 10,886 2,730 1,609Due after more than one year:Deferred tax asset - - 80 41

16,857 10,886 2,810 1,650

17. Creditors: amounts falling due within one year


Bank loans (see note 19) 5,903 2,158 1,671 2,158Other loans and finance leases 417 675 - -7% convertible loan notes - 4,154 - 4,154

6,320 6,987 1,671 6,312


loan notesBetween one and two years - 4,154 - 4,154Due within one year 2,197 2,509 2,197 2,509

2,197 6,663 2,197 6,663

Bank loans and overdraftsBetween one and two years 1,794 456 608 456Between two and five years 4,109 1,702 1,063 1,702

5,903 2,158 1,671 2,158Due within one year 4,590 2,131 607 114

10,493 4,289 2,278 2,272

Hire purchase and similar contractsBetween one and two years 341 311 - -Between two and five years 76 364 - -

417 675 - -Due within one year 421 303 - -

838 978 - -

Name Country of incorporation Nature of business

Zetar International limited * England & Wales Holding company for the Group’s overseas operationsHorsley, Hick & Flower limited England & Wales manufacture of chocolate and yoghurt enrobed fruit and nutsHumdinger limited * England & Wales Trading, processing and packing of dried food productsKinnerton (Confectionery) Company limited * England & Wales manufacture and wholesale of chocolate and other confectioneryKinnerton (Confectionery) Australia Pty limited Australia Wholesale of chocolate and other confectioneryKinnerton Hong Kong limited Hong Kong management services to other group companiesreadifoods limited * England & Wales Packing and distribution of dried fruit and nutsAccess Far-East limited England & Wales Dormant (after the transfer of operations to a Group company in 2006/07)Chesterfields Fine Foods limited England & Wales Dormant


raw materials and consumables 5,935 2,683 - -Work in progress 564 255 - -Finished goods and goods for resale 2,561 1,442 - -

9,060 4,380 - -


Bank loans and overdrafts (see note 19) 4,590 2,131 607 114Trade creditors 12,306 8,456 70 206Other loans and finance leases 421 303 - -loan notes 2,197 2,509 2,197 2,509Amount owed to other Group undertakings - - 4,500 14,290Other Creditors

Taxation and social security 3,432 2,379 168 -Deferred consideration payable 214 1,713 214 1,713Corporation tax 872 443 - -Sundry creditors 183 4 - -

Accruals 3,628 4,105 336 165

27,843 22,043 8,092 18,997

14. investments

£000’s Shares in subsidiary undertakingsCompany (as restated)

CostAt 1 may 2006 (as previously stated) 37,614Prior year adjustment – cumulative capital contribution regarding share-based payments 109

At 1 may 2006 (as restated) 37,723Additions 39,150Capital contribution regarding share-based payment provided via subsidiary undertakings 119Adjustment to deferred consideration payable from previous year (286)less: impact of group reorganisation (28,500)

Cost and net book value at 30 April 2007 48,206



Global Reports LLC


Group

The movement on provisions for liabilities is as follows:

Company

Deferred taxation Deferred Total£000’s (as restated) consideration (as restated)

At 30 April 2006 (as previously stated) 290 1,000 1,290Prior year adjustment (74) - (74)

At 1 may 2006 (as restated) 216 1,000 1,216Charged to profit and loss account 380 - 380Acquisition of subsidiary undertakings 95 1,350 1,445reduced deferred consideration - (286) (286)Transferred to creditors: due within one year - (214) (214)

At 30 April 2007 691 1,850 2,541

£000’s Deferred taxation Deferred consideration Total

At 1 may 2006 - 1000 1000Acquisition of subsidiary undertakings - 300 300reduced deferred consideration - (286) (286)Transferred to creditors: due within one year - (214) (214)

At 30 April 2007 - 800 800

Performance related deferred consideration, in relation to the acquisitions of readifoods, Humdinger and Horsley, Hick & Flower is payable within the next 2 years, dependent on the results of these businesses.

Deferred tax is provided by the Group at 30% analysed between the following timing differences:

As at 30 April 2007 As at 30 April 2007 As at 30 April 2006 As at 30 April 2006£000’s Not Provided Provided Not Provided Provided

Accelerated capital allowances - 858 - 686Tax losses carried forward (264) - - -Other timing differences - (167) - (470)

(264) 691 - 216



22. Reserves

The movement on reserves during the year was as follows:

Group Company Profit and Share Profit and Share loss account premium merger loss account premium merger£000’s (as restated) account reserve (as restated) account reserve

At 30 April 2006 (as previously stated) 1,316 12,004 1,738 (1,290) 12,004 1,738Prior year adjustments 74 - - 150 - -

At 1 may 2006 (as restated) 1,390 12,004 1,738 (1,140) 12,004 1,738Profit for the year 3,180 - - 15,175 - -Share-based payments 249 - - 249 - -Arising on share issues - 11,042 1,491 - 11,042 1,491less: costs of issue - (373) - - (373) -

4,819 22,673 3,229 14,284 22,673 3,229

The share premium of £1,738,000 on the Ordinary Shares issued to the vendors of Kinnerton Group during the year ended 30 April 2006, has been reclassified to the merger reserve.

The parent company has taken advantage of section 230 of the Companies Act 1985 and has not included its own profit and loss account in these financial statements.

share options

* Share options outstanding contributing to share-based payment charge (note 8)

During the year 44,000 unapproved share options and 20,543 ‘A’ warrants were exercised at £2.00; the weighted average price of these shares based on the respective dates of exercise was £4.46. At 30 April 2007 a total of 1,861,541 options/warrants were exercisable at £2.00.

Outstanding options Exercise period 30 April 2007 30 April 2006 Exercise Price From To

Enterprise management Incentive scheme * 49,999 49,999 £2.00 18/03/2008 18/03/2015 299,999 299,999 £2.00 20/05/2008 20/05/2015 18,284 18,284 £2.95 03/01/2009 03/01/2016

Employee benefit trust 1,557,705 1,557,705 £2.00 18/04/2005 18/04/2012

Unapproved share options 48,095 92,095 £2.00 12/09/2005 13/04/2012

‘A’ Warrants 255,741 276,284 £2.00 13/04/2005 13/04/2012‘B’ Warrants * 184,189 184,189 £2.00 13/04/2008 13/04/2012

2,414,012 2,478,555

20. Provisions for liabilities


Deferred tax 691 216 - -Performance related deferred consideration 1,850 1,000 800 1,000

2,541 1,216 800 1,000

The movements in share capital during the year were as follows:

During the year the company allotted 305,701 ordinary shares with a nominal value of £30,570 in connection with the acquisition of Humdinger limited and 66,964 ordinary shares with a nominal value of £6,696 in connection with the acquisition of Horsley, Hick & Flower limited.

Number Share capital Issue price Gross Issue proceeds 000’s £000’s £ £000’s

Ordinary shares of £0.10 each as at 30 April 2006 7,497 750 Share options exercised during the year 64 6 2.00 128Issued in connection with funding the Humdinger acquisition 2,800 280 4.00 11,200Issued to the vendors of Humdinger 306 30 4.02 1,228Issued to the vendors of Horsley, Hick & Flower 67 7 4.48 300

10,734 1,073 12,856

21. share capital

£000’s 2007 2006

authorised20,000,000 (2006: 16,000,000) ordinary shares of £0.10 each 2,000 1,600

allotted called up and fully paid equity share capital10,733,708 (2006: 7,496,500) ordinary shares of £0.10 each 1,073 750

Global Reports LLC




26. Gross cash flows

Audited Pro-forma Audited Year ended Year ended 72 weeks ended£000’s 30 April 2007 30 April 2006 30 April 2006

Returns on investments and servicing of financeInterest received 90 100 121minority interest dividends paid (8) (9) (9)Interest and other bank charges (1,446) (987) (1,408)

(1,364) (896) (1,296) taxationUK corporation tax paid (1,425) (333) (333)

(1,425) (333) (333)

Capital expenditurePayments to acquire tangible fixed assets (1,902) (1,341) (1,341)receipts from sales of tangible fixed assets 40 13 13

(1,862) (1,328) (1,328) acquisitions and disposalsPurchase of subsidiary undertakings (9,782) (3,913) (26,790)(Overdraft) / net cash acquired with subsidiary undertakings (1,217) (1,244) 10,839

(10,999) (5,157) (15,951) FinancingIssue of ordinary share capital 11,328 2,385 13,410Costs associated with issue of share capital (373) (143) (750)Cash inflow from increase in long-term borrowings 5,540 - 6,500Cash outflow from repayment of long-term borrowings (6,258) (4,070) (4,070)Expenses in respect of bank borrowings (17) (156) (156)Capital element of finance lease rental payments (375) (412) (412)

9,845 (2,396) 14,522

23. Reconciliation of movements in Group shareholders’ funds The reconciliation of movements in equity shareholders’ funds were as follows:

Audited Pro-forma Audited Year ended Year ended 72 weeks ended 30 April 2007 30 April 2006 30 April 2006£000’s (as restated) (as restated)

Profit for the financial period 3,180 1,280 1,143Issue of shares net of costs 12,483 2,242 14,492Share-based payments charge 249 238 247

Net addition to shareholders’ funds 15,912 3,760 15,882Opening shareholders’ funds (as previously stated) 15,808 12,119 -Prior year adjustment 74 3 -

Opening shareholders’ funds (as restated) 15,882 12,122 -

Closing shareholders’ funds 31,794 15,882 15,882

24. minority interests

Audited Pro-forma Audited Year ended Year ended 72 weeks ended£000’s 30 April 2007 30 April 2006 30 April 2006

access Far-east limitedminority interest brought forward (6) (7) (7)minority interest in the profit for the period (2) (8) (8)Dividend paid to minority interest 8 9 9

minority interest carried forward - (6) (6)

The business of Access Far-East limited was transferred during the year to a fellow subsidiary, Kinnerton (Confectionery) Company limited, which also purchased the minority interest.

Profit and loss account Audited Pro-forma Audited Year ended Year ended 72 weeks ended£000’s 30 April 2007 30 April 2006 30 April 2006

Increase in administrative expenses for share-based payment charge (249) (238) (247)Deferred tax effect of share-based payment charge 75 71 74

Decrease in profit for the financial year (174) (167) (173)

Prior year adjustments

In accordance with Financial reporting Standard 3 – ‘reporting Financial Performance’ (FrS 3) – the following prior year adjustment has been made:

Financial reporting Standard 20 – ‘Share-based payment’ (FrS 20) – has been adopted for the first time during the current year and has been applied retrospectively to all equity instruments that had not vested at 1 may 2006. The comparative figures in the primary statements and notes have been restated to reflect the implementation of the accounting standard. The effects of the change are summarised below:

Balance sheet as at 30 april 2006£000’s Group Company

Decrease in deferred tax liability due to share-based payment charge 74 41Capital contribution regarding share-based payment provided via subsidiary undertakings - 109

Increase in net assets 74 150

25. Reconciliation of operating profit to net cash inflow from operating activities

Audited Pro-forma Audited Year ended Year ended 72 weeks ended 30 April 2007 30 April 2006 30 April 2006£000’s (as restated) (as restated)

Group Operating profit 6,023 3,890 3,794Depreciation 1,651 1,597 1,597loss on sale of fixed assets 17 17 17Goodwill amortisation 1,371 805 805Share-based payment charge 249 238 247(Increase) / decrease in stocks (934) 1,198 1,198(Increase) in debtors (1,378) (2,961) (3,011)(Decrease) / increase in creditors (1,185) 544 647

Net cash inflow from operating activities 5,814 5,328 5,294

In addition to the shares issued for cash included above, 372,665 ordinary shares were issued to the vendors of Humdinger and Horsley, Hick & Flower to satisfy £1,528,000 of the consideration on the acquisitions.

Global Reports LLC




30. Contingent liabilitiesThe Group has no material contingent liabilities. The Company has provided guarantees to its borrowers in respect of subsidiary borrowings amounting to £8,215,000 (2006: £2,017,000).

31. Pension arrangements The Group operates a range of employee group personal pension schemes with a variety of providers in respect of which it makes a contribution of between 2.5% and 5% of an employee’s salary, subject to the employee meeting specific eligibility criteria. The Group also operates a number of stakeholder pension schemes with a variety of providers which an employee may join on commencement of employment. There is no company contribution to these schemes.The Company makes payments into a small number of personal pension plans in relation to certain key directors and managers of the subsidiary companies with the Group. The pension arrangements of the parent company directors are detailed in the remuneration report.

32. Financial instruments The principal aims of the Group’s financial risk management activities are to monitor and address the risks arising from the Group’s external and internal funding requirements, optimise net interest cost after tax and manage financial risk arising from the international business of the Group, principally interest rate and currency risk. As permitted by FrS 13 ‘Derivatives and other financial instruments: disclosure’, short term debtors and creditors have been excluded from the disclosures, other than currency disclosures. Given the size of the Group, the Directors have not delegated the responsibility for monitoring financial risk management to a sub-committee of the Board. The policies set by the Board of Directors are implemented by the Group’s senior managers.

liquidity risk The Board seeks to achieve a balance between certainty of funding with committed facilities and a flexible cost-effective structure. At 30 April 2007 the Group had bank facilities of £22,930,000 (2006: £25,000,000), of which £10,725,000 (2006: £4,447,000) had been drawn down (including overdraft utilisation). The facilities comprise a £15,000,000 five year committed revolving credit facility and £7,930,000 five year term loan facilities. Since 30 April 2007 a further £5 million five year term loan facility has been agreed in principle in connection with the acquisition of the business and assets of Britannia Biscuits Company (International) limited and negotiations are being concluded to increase the five year committed revolving credit facility to £17 million.

interest rate risk The Group has both interest bearing assets and interest bearing liabilities, with the main interest rate risk arising on the drawn down bank facilities. The Group has used interest rate swap arrangements to address this, the principal effect of which is to cap the interest rate payable at no more than 6.5% on average borrowings during the eleven months ending 31 march 2008 of £6,580,000. The Group has used a cap rather than raising fixed rate borrowings as in the directors’ opinion, using floating rate borrowing facilities and a cap on the interest rate provided was a cheaper method of maintaining debt finance during the year. The interest rate cap is to be settled on a monthly or quarterly basis, with the settlement amount being the difference between the capped and the floating interest rate amounts on the outstanding balance. In addition, when the Group issues loan notes to vendors, it makes use of fixed rates of interest where appropriate to provide certainty of financing cost.

28. Commitments under operating leases At 30 April 2007 and 30 April 2006 the Company had no operating lease commitments. At 30 April 2007 the Group had annual commitments under operating leases as follows:

As at 30 April 2007 As at 30 April 2006£000’s land and buildings Other land and buildings Other

Due to expire within one year - 51 - 24Due to expire within two and five years 213 72 227 80Due to expire in more than five years 261 40 97 -

474 163 324 104

29. Financial commitments At 30 April 2007 the Group had financial commitments of £8,107,000 (2006: £7,088,000) in respect of forward contracts for the purchase of raw materials and a further financial commitment of £4,139,000 (2006: £2,729,000) in respect of forward contracts for the purchase of foreign currencies. Capital expenditure commitments outstanding at 30 April 2007 amounted to £732,000 (2006: £261,000).

Fair values Set out below is a comparison by category of book values and fair values of the Group’s financial assets / (liabilities):

As at 30 April 2007 As at 30 April 2007 As at 30 April 2006 As at 30 April 2006£000’s Book value Fair value Book value Fair value

Derivative financial instruments held to manage:Interest rate exposure - 45 - (55)Forward foreign currency exposure - 5 - (9)Forward commodity price exposure - 424 - (124)

The fair values have been determined by reference to prices prevailing at the balance sheet date obtained from the providers of such instruments.

33. Related party transactions

The Company has taken advantage of the exemptions within FrS8 ‘related party disclosures’ and has not disclosed transactions with other Group companies. marwyn Group limited and its affiliates (“marwyn”) are deemed to be related parties of Zetar Plc as mark Watts, who resigned on 27 July 2006, and David Williams have been common Directors during the year. marwyn was paid £60,000 in respect of accommodation and administrative services (2006: £60,000). During the period ended 30 April 2006 marwyn was also paid a corporate advisory fee of £150,000 in respect to the acquisition of Kinnerton. At 30 April 2007 marwyn, through marwyn ventures Fund llP, held 873,715 (2006: 650,715) ordinary shares and warrants over 439,930 (2006: 460,473) ordinary shares in Zetar Plc.

At 30 April 2007 the Group had loan notes payable to Clive Beecham, and connected parties, of £1,410,000 including accrued interest (2006: £5,099,000). Clive Beecham, and connected parties, received £5,353,000 (including interest of £529,000) from the redemption of “A” and “B” loan notes during the year ended 30 April 2007. The Kinnerton Pension Fund, of which CH Beecham is a beneficiary, was paid £97,000 rent for land and buildings used by the Kinnerton (Confectionery) Company limited (2006: £97,000).

34. Post balance sheet event

On 23 may 2007, the Group acquired the assets and business of Britannia Biscuits Company (International) limited for an initial cash consideration of £4,700,000. Additional consideration may become payable dependent on the results of this business over the three year period ending September 2010.

The Group enters into forward foreign currency contracts to eliminate the currency exposures that arise on purchases denominated in foreign currencies, immediately those purchases are transacted. It also uses interest rate swaps to manage its interest rate profile and forward commodity contracts to manage exposure to movements in price of chocolate and other commodities.

Currency exposure and hedging

The Group operates internationally giving rise to exposure from changes in foreign exchange rates, particularly the US Dollar and the Euro. The Group has taken out forward currency contracts in respect of the majority of committed overseas forward commodity purchases. These financial instruments have not been designated as hedges.

Credit risk

The Group minimises its exposure to credit related losses on financial instruments, in the event of non-performance by counterparties, via credit insurance coverage with established providers. In territories such as emerging markets which may represent higher than usual concentrations of trading credit risk, instruments such as letters of credit may be used. The Group has implemented policies that require appropriate credit checks on potential customers before sales commence.

Price risk

The Group minimises its exposure to adverse raw material price changes by entering into forward purchases to cover known customer requirements for between six and nine months

Currency exposures

The table below shows the Group’s currency exposures that give rise to net currency gains and losses that will be recognised in the profit and loss account.

Such exposures comprise the monetary assets and monetary liabilities of the Group that are not denominated in the functional currency of the operating unit involved.

As at 30 April 2007 these exposures were as follows:

Net foreign monetary assets US Dollar Euro Total£000’s 2007 2006 2007 2006 2007 2006

Functional currency of Group operationSterling 136 1,664 440 561 576 2,225

27. analysis of changes in net debt

Other non£000’s At 1 may 2006 Cash flow Acquisitions cash changes At 30 April 2007

Cash in hand, at bank 2,925 787 - - 3,712Overdrafts (2,017) (778) - - (2,795)

Net cash at bank 908 9 - - 917Debt due within one year (2,623) 2,442 (9) (3,802) (3,992)Debt due after one year (6,312) (1,707) - 2,116 (5,903)Finance leases (978) 375 (235) - (838)

Net debt (9,005) 1,119 (244) (1,686) (9,816)

Total other non-cash changes relate to the issue of loan notes in connection with elements of the consideration payable for acquisitions of subsidiary undertakings and related interest accruing thereon. Included within other non-cash changes is a reclassification of debt due after one year to debt due within one year of £3,891,000.

The interest rate profile on floating rate balances at 30 April 2007 is effectively capped to the extent set out above. The fixed rate balances at 30 April 2006 were fixed at a weighted average interest rate of 6.4% for a weighted average period of 1.4 years. These fixed rate balances have been repaid during the year before the end of their term.

As at 30 April 2007 As at 30 April 2006£000’s Total Floating rate Fixed rate Total Floating rate Fixed rate

CurrencySterling 12,690 12,690 - 10,952 4,289 6,663

Interest rate profile:

Global Reports LLC


notice ofannual general meeting

Notice is hereby given that the Annual General meeting of Zetar Plc (registered in England and Wales number 5308258) (“Company”) will be held at the offices of DlA Piper UK llP, 3 Noble Street, london EC2v 7EE at 12 noon on Wednesday 26 September 2007 for the following purposes:Ordinary businessTo consider and if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions:1. To receive and adopt the financial statements for the year ended 30 April 2007 together with the reports of the directors and auditor thereon.2. To re-elect Ian Blackburn, who retires by rotation, as a director of the Company.3. To re-elect Dale mullins, who has been appointed by the board since the last annual general meeting, as a director of the Company.4. To appoint Grant Thornton UK llP as auditor, to hold office from conclusion of the meeting until the conclusion of the next general meeting at which accounts are laid before the Company and to authorise the directors to determine its remuneration.5. To approve the remuneration report (set out on pages 17 and 18 of the annual report and financial statements) for the year ended 30 April 2007.Special businessTo consider and, if thought fit, pass the following resolutions of which resolution 6 will be proposed as an ordinary resolution and resolutions 7, and 8, will be proposed as special resolutions:6. That, pursuant to section 80 of the Companies Act 1985 (“Act”) and in addition to all existing authorities under that section, the directors of the Company be and are hereby generally and unconditionally authorised to exercise all powers of the Company to allot relevant securities (within the meaning of section 80 of the Act) up to an aggregate nominal amount of £357,996 provided that (unless previously revoked, varied or renewed) this authority shall expire at the conclusion of the next annual general meeting of the Company after the passing of this resolution or 15 months from the date of the passing of this resolution (whichever is the earlier), save that the Company may make an offer or agreement before the expiry of this authority which would or might require relevant securities to be allotted after such expiry and the directors may allot relevant securities pursuant to any such offer or agreement as if the authority conferred by this resolution had not expired. 7. That, subject to the passing of resolution 6, pursuant to section 95 of the Act and in addition to all existing authorities under that section, the directors of the Company be and are hereby generally empowered to allot equity securities (within the meaning of section 94(2) of the Act) for cash pursuant to the authority conferred by resolution 6 above as if section 89(1) of the Act did not apply to any such allotment, provided that this power shall be limited to:

7.1 the allotment of equity securities in connection with an offer (whether by way of a rights issue, open offer or otherwise) to holders of ordinary shares in the capital of the Company in proportion (as nearly as practicable) to the respective numbers of ordinary shares held by them, subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements or any legal or practical problems under the laws of any territory or the requirements of any regulatory body or stock exchange; and7.2 the allotment of equity securities for cash (otherwise than pursuant to paragraph 7.1 above) up to an aggregate nominal amount of £161,098, and (unless previously revoked, varied or renewed) shall expire at the conclusion of the next annual general meeting of the Company after the passing of this resolution or 15 months from the date of the passing of this resolution (whichever is the earlier), save that the Company may make an offer or agreement before the expiry of this power which would or might require equity securities to be allotted for cash after such expiry and the directors may allot equity securities for cash pursuant to any such offer or agreement as if the power conferred by this resolution had not expired.

8. That, pursuant to section 166 of the Act, the Company be and is generally and unconditionally authorised to make market purchases (within the meaning of section 163 of the Act) of ordinary shares of 10 pence each in the capital of the Company (“Shares”), provided that:

8.1 the maximum number of Shares which may be purchased is 1,073,991;8.2 the minimum price (exclusive of expenses) which may be paid for a Share is 10 pence;8.3 the maximum price (exclusive of expenses) which may be paid for a Share is an amount equal to 105 per cent of the average of the middle market quotations for the Shares as derived from the Daily Official list of the london Stock Exchange plc for the five business days immediately preceding the day on which the purchase is made, and (unless previously revoked, varied or renewed) shall expire at the conclusion of the next annual general meeting of the Company after the passing of this resolution or 15 months from the passing of this resolution (whichever is the earlier), save that the Company may enter into a contract to purchase Shares before the expiry of this authority under which such purchase will or may be completed or executed wholly or partly after such expiry and may make a purchase of Shares pursuant to any such contract as if the authority conferred by this resolution had not expired.

By order of the BoardCompany Secretary 23 July 2007registered office: 11 Buckingham Street, london WC2N 6DF

NotesAny member entitled to attend and vote at the Annual General meeting is entitled to appoint one or more proxies to attend and, on a poll, vote instead of him and such proxy need not be a member of the Company. A proxy may not speak at the meeting, except with the permission of the chairman of the meeting.A proxy form is enclosed for the holders of ordinary shares of 10p each in the Company.To be valid, any form of proxy and power of attorney or other authority under which it is signed, or a notarially certified or office copy of such power or authority, must reach the Company’s registrars, Capita registrars not less than 48 hours before the time of holding of the meeting or of any adjournment of the meeting.Completion and return of a form of proxy will not preclude a member from attending and voting at the meeting in person, should he/she subsequently decide to do so.In accordance with regulation 41 of the Uncertificated Securities regulations 2001, only those members who hold shares in uncertificated form entered on the register of members of the Company as at 6.00pm on 24 September 2007 (or 48 hours before the time of any adjournment of the meeting), shall be entitled to attend or vote at the Annual General meeting in respect of the number of shares registered in their name at that time. Changes to entries on the register of members after that time shall be disregarded in determining the rights of shareholders to attend or vote at the meeting.Copies of the service contracts of each of the directors, and the register of directors’ interests in shares of the Company kept pursuant to section 325 of the Act will be available for inspection at the registered office of the Company during usual business hours on any weekday (Saturdays, Sundays and public holidays excluded) from the date of this notice until the date of the Annual General meeting and at the place of the Annual General meeting from at least 15 minutes prior to and until the conclusion of the Annual General meeting.Explanatory notes on the proposed resolutionsThe explanatory notes below summarise the purpose of certain of the resolutions to be voted on by the shareholders at this year’s Annual General meeting.Ordinary businessTo receive the directors’ report and Group accounts for the year ended 30 April 2007. (resolution1intheNoticeofmeeting)

At the meeting there will be an opportunity for shareholders to ask questions of the directors on the directors’ report and Group accounts.

To re-elect Dale mullins as a director of the Company. (resolution3intheNoticeofthemeeting)

Since the last Annual General meeting the board of directors of the Company approved the appointment of Dale mullins as finance director of the Company with effect from 1 February 2007. At the meeting there will be an opportunity for the shareholders to ask questions of the directors on the change in the constitution of the board of the Company.

Appointment of auditors. (resolution4intheNoticeofmeeting)The directors recommend the appointment of Grant Thornton UK llP as auditors to the Company and seek authorisation to fix the auditors’ remuneration.

To approve the remuneration report for the year ended 30 April 2007. (resolution5intheNoticeofmeeting)

At the meeting there will be an opportunity for shareholders to ask questions of the directors on the remuneration report which is an additional reporting requirement arising pursuant to the Directors’ remuneration report regulations 2002. The remuneration report is on pages 17 and 18 of the directors’ report and accounts.

Special business General authority to allot shares.(resolution6intheNoticeofmeeting)

This resolution renews the existing authority of the directors to exercise the power of the Company to allot shares pursuant to section 80 of the Act. The effect of this resolution is to permit the directors to allot relevant securities until the AGm in 2008, up to an aggregate nominal value of £357,996. This represents one third of the Company’s issued share capital as at 23 July 2007.

Authority to allot shares for cash and to disapply pre emption rights.(resolution7intheNoticeofmeeting)

This resolution, which will be proposed as a special resolution, renews the directors’ authority to allot, grant options over or otherwise deal with equity securities in the Company for cash other than pro rata to existing shareholdings until the AGm in 2008, up to an aggregate nominal amount of £161,098. This is equal to 15% of the issued share capital of the Company as at 23 July 2007.

Authority to purchase own shares.(resolution8intheNoticeofmeeting)This resolution, which will be proposed as a special resolution, gives the directors the authority to make market purchases of the Company’s shares. Any shares purchased would be cancelled and the number of shares in issue would thereby be reduced.The authority to purchase will only be exercised if to do so would result in an increase in earnings per share and would be in the interests of shareholders generally.Other investment opportunities, appropriate gearing levels and the overall position of the Company will be taken into account before deciding upon this course of action. The maximum number of shares which may be purchased is 1,073,991, representing 10% of the Company’s issued capital as at 23 July 2007. The authority would expire at the conclusion of the AGm of the Company in 2008.

timeline

Zetar Plc

December 2004 Zetar Plc incorporated.

January 2005 AIm admission and raising of £0.75 million at £1.00 per share.

April 2005 Acquisition of Kinnerton Group limited for £32 million and fund raising of £10.25 million at £2.00 per share.

March 2006 Acquisition of readifoods limited for up to £4.2 million and fund raising of £2.38 million at £3.50 per share.

July 2006 Acquisition of Humdinger limited for up to £12.975 million and fund raising of £11.2 million at £4.00 per share.

October 2006 Acquisition of Horsley, Hick & Flower (“Salamanda”) for up to £2.25 million.

May 2007 Formation of The Baked Snacks Company limited and its subsequent acquisition of the assets and business of Britannia Biscuits Company (International) limited for £4.7 million and future financial performance related consideration of up to £23 million.

Global Reports LLC

Thisannualreportisprintedon75%recycledpaper


ZetaR Plcprincipal subsidiaries and trading divisions

ZETAR Plc ZETAR Plc11 Buckingham Streetlondon WC2N 6DFTelephone: +44 (0)20 7004 2700Website: www.zetarplc.com

CONFECTIONERY DIVISIONKinnerton Confectionery Kinnerton Confectionery Company limited1000 Highgate Studios53/79 Highgate roadlondon NW5 1Tl Telephone: +44 (0)20 7284 9500Website: www.kinnerton.com SalamandaHorsley, Hick & Flower limited,Unit 4, Ashbrooke Park,lincoln Way,Sherburn in Elmet,Yorks, lS25 6NS

NATURAL & PREMIUM SNACKS DIVISIONReadifoods readifoods limitedStation roadHeckingtonSleafordlincolnshire NG34 9JHTelephone: +44 (0)1529 461551Website: www.readifoods.com

Humdinger Humdinger limitedGothenburg WaySutton Fields Industrial EstateKingston Upon HullHU7 0YGTelephone: +44 (0)1482 625790Website: www.humdinger-foods.co.uk

BritanniaThe Baked Snacks Company limitedUnit 1,South Tees Imperial Food Park,Imperial Avenue,South Bankmiddlesbrough, TS6 6BATelephone: +44 (0)1642 440000Website: www.biscuits.eu.com

shareholderinformation

Website The website www.zetarplc.com contains the corporate and financial information and copies of the interim and annual financial statements which may be downloaded. This site allows access to all Group operating divisions and subsidiary websites. All Group websites are regularly updated.

Administrative enquiries

All enquiries relating to individual shareholder matters should be made to the registrar at: Capita registrars, Bourne House, 34 Beckenham rd Beckenham, Kent Br3 4TU The registrar will assist with enquiries regarding any change of circumstances (e.g. name, address, bank account details, bereavement, lost certificates, dividend payment and transfer of shares). All correspondence should be clearly marked “Zetar Plc” and quote the full name and address of the registered holder of the shares. Shareholder information, together with a range of online services for Zetar Plc shareholders is also available at the registrar’s website:www.capitaregistrars.com. This website may also be accessed directly from the Zetar Plc website www.zetarplc.com.

Share price

The share price of Zetar Plc ordinary 10p shares on the following dates was:1 may 2006 £3.8530 April 2007 £5.8523 July 2007 £5.69The current share price of Zetar Plc ordinary shares of 10p can be obtained via the link to the website of the london Stock Exchange www.londonstockexchange.com and entering zetar or ztr. Alternatively, it may be accessed through FT Cityline by dialling 0906 8432485 (calls cost 60p per minute).

Consolidation of share certificates

If your total registered shareholding is represented by several share certificates, you may wish to have these replaced by one consolidated certificate. There is no charge for this service. You should send your share certificate to Zetar Plc’s registrar, together with a letter of instruction.

Investor relations

For further copies of the annual financial statements or other investor relations enquiries, please contact: Financial Dynamics, Holborn Gate, 26 Southampton Buildings, london WC2A 1PB

Joint Company Secretary

Susan Fadil and robert Hillhouse mayer, Brown, rowe & maw llP, 11 Pilgrim Street, london EC4v 6rW

Company registration

registered office: 11 Buckingham Street, london WC2N 6DFregistered number: 05308258 registered in England

Financial Calendar

30 April 2007 Financial year end 24 July 2007 Announcement of preliminary results 26 September 2007 Annual General meeting 31 October 2007 Interim period end January 2008 Announcement of interim results

54% = 10 institutional investors with the largest holdings14% = Directors’ and related holdings 32% = Other investors

Global Reports LLC

11 buckingham street - morningstar, inc

Documents