24th Sep 2015 13:17
LONDON (Alliance News) - Poundland Group PLC Thursday raised GBP50 million through the placing of shares in order to fund its acquisition of 99p Stores Ltd, and said that it expects core pretax profit for its full financial year to meet market expectations, although it will be weighted towards the second half.
Poundland said it raised GBP50.0 million via the placing of 17.9 million shares at 280.00 pence per share. Shares in the company were down 10% to 277.3 pence in afternoon trade on Thursday, one of the worst performers in the FTSE 250.
The placing was conducted through an accelerated bookbuild process, with JP Morgan Cazenove acting as sole bookrunner and Shore Capital acting as co-lead manager.
The discount retailer is buying its smaller - and slightly keener priced - rival 99p Stores for GBP55 million, in a deal which was approved by the UK Competition and Markets Authority last week. The proceeds from the raising will be used to fund the cash portion of the consideration, and Poundland expects the acquisition to be complete by Monday next week.
Poundland added that its store opening programme is ahead of plan, expecting to have opened 50 net new stores in the UK and Ireland in the first half of the current financial year, and 70 by the end of the full year.
Poundland said the CMA's review process had taken longer than anticipated and, a result, it has limited access to a detailed trading performance for 99p Stores, adding that the indications suggest its finanicial position has weakened since Poundland did its original due diligence on the deal. Still, Poundland said this does not effect the rationale behind buying its rival and said it will not impact its plans to generate the synergies it originally envisaged.
Sales for the 14 weeks ended September 20 increased 5.9% to GBP303.2 million from GBP286.2 million in the same period the year before, and grew 4.9% to GBP532.1 million in the 25 weeks to the same date from GBP507.5 million the prior year. Like-for-like sales however declined 2.9% in the first half, compared with 4.7% growth last year.
Poundland said it remains confident in the outlook for the full year and expects pretax profit for the core business to be in line with market consensus, although profit will be phased towards the second half of the year given tough comparables in the first half, the weak euro and softer sales comparables in the second half.
The retailer will also incur higher pre-opening costs in the first half, and therefore anticipates pretax profit for the first half to be lower than the first half of the year before.
By Karolina Kaminska; [email protected] @KarolinaAllNews
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
PLND.L