21st May 2015 11:37
LONDON (Alliance News) - Booker Group PLC was the best performer in the FTSE 250 midday Thursday, after it confirmed it will buy the Londis and Budgens convenience store chains and reported growth in profit in its recently-ended financial year.
Booker Group's shares were up 10% at 167.50 pence midday Thursday.
The company said it will purchase Musgrave Retail Partners GB Ltd, which comprises Londis and Budgens, from Irish food wholesaler Musgrave Group PLC for GBP40 million in cash.
Londis operates 1,630 convenience stores and made sales of GBP504 million in 2014, while Budgens operates 167 stores and made sales of GBP329 million in 2014. Musgrave Retail Partners on the whole made sales of GBP833 million, but made an operating loss before exceptional items of GBP7.4 million, Booker said.
Booker added that it anticipates the acquisition to be earnings neutral in the first year of ownership, but will be earnings enhancing thereafter.
"Booker, Londis and Budgens are joining forces to help independent retailers prosper throughout Great Britain. This transaction should strengthen Londis, Budgens, Premier, Family Shopper and other Booker retailers, through improving choice, prices and service to consumers. Overall it will help independent retailers prosper," Chief Executive Charles Wilson said in a statement.
Separately, Booker reported a pretax profit of GBP138.8 million in the year to March 27, up 14% from GBP122.1 million the prior year, boosted by a 1.5% increase in revenue to GBP4.8 billion from GBP4.7 billion.
It added that it will pay a total dividend of 3.66 pence per share, a 14% increase on the year before, plus a special capital return of 3.50p.
The company acquired British wholesaler Makro in 2012, and following its successful integration Booker implemented a 3.50p capital return to shareholders in July 2014. The group now intends to pay a second capital return and anticipates a further return in 2016.
The 3.50p per share represent a return approximately GBP62 million, based on the company's current issued share capital.
Net cash stands at GBP147.0 million, Booker said, although this is down from GBP149.6 million the year before.
"The group's trading in the first seven weeks of the current financial year is ahead of last year. However, we anticipate that the challenging consumer and market environment will persist through the coming year and the UK's food market remains very competitive," Wilson said in a statement.
"Whilst there is increasing price competition in the UK grocery and discount sectors, we will continue to deliver our plans to offer our customers even better choice, prices and service supported by the continued delivery of our efficiency programmes. We are on track to deliver an outcome for the new financial year in line with our plans and to make progress in this challenging environment," he added.
Investec liked what it saw from Booker's results, raising its 2016 pretax profit estimate by 6% in response to GBP154.3 million and its forecast for 2017 by 7% to GBP164.3 million. Analyst Nicola Mallard added that Booker's acquisition of Londis and Budgens looks a strong fit and will enhance Booker's retail offer and delivery capability.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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