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Booker goes upmarket

Booker marked another solid set of figures with a side order of acquisitions. The leading cash and carry group bought fine dining supplier Ritter-Courivauld - which sells ingredients to Michelin-starred restaurants - in an all-share purchase worth £14.5m, as well as trade drinks wholesaler Classic for around £4m in cash.

Although both deals only add around £30m of sales each and won't make a material contribution to this year's earnings, chief executive Charles Wilson said they were an important step in the continual improvement of the group's offer to the restaurant industry and didn't rule out further deals to consolidate its 8-9 per cent share of the highly fragmented catering supply market.

In fact, the higher-margin food service business continued to perform well, increasing like-for-like sales 6.4 per cent to £562m, an impressive performance in a contracting market. Continued investment in price and service also meant a 5 per cent increase in sales to retailers. Mr Wilson also said that trading at the group's first Indian outlet had been encouraging, attracting around 300 to 400 customers a day, and two more sites will be opened next Spring.

Broker Evolution Securities expects adjusted full-year pre-tax profits of £66.6m and EPS of 3.6p (from £57.2m and 3.1p last year), rising to £75.2m and 3.9p, respectively, the year after.

BOOKER GROUP (BOK)

ORD PRICE:51pMARKET VALUE:£770m
TOUCH:51-52p12-MONTH HIGH:52pLOW: 38p
DIVIDEND YIELD:2.5%PE RATIO:14
NET ASSET VALUE:19p*NET CASH:£10.1m

Half-year to 10 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20091.6129.71.660.24
20101.7036.92.030.27
% change+5+24+22+13

Ex-div: 27 Oct

Payment: 26 Nov

*Includes intangible assets of £424m, or 28p a share

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More analysis of company results

IC View

Booker's high-quality management team are taking sensible steps to improve the profitability and growth profile of the business. Trading on a forecast PE ratio of 13 for the financial year to March 2012, the shares continue to rate good value.

Last IC view: Good value, 41p, 21 May 2010

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