The ADM Londis wholesale and convenience store business has been valued at nearly €38.5 million after a 62 per cent rise in pretax profits to €4.6 million last year.

The valuation by accountants BDO Simpson Xavier comes ahead of a new round of trading next month in the grey market for shares in the group.

Londis provides a wholesale service to independent retailers who use its brand in their stores. Its biggest competitors are Musgrave's, which owns the Centra and SuperValu chains, and BWG, which owns Spar.

A former co-op, Londis converted to plc status last year and opened a grey market in its groups to franchisees.

Londis chief executive Stephen O'Riordan said that 41,000 shares changed hands in a trading round in January-March. At that time, the shares were priced at €48.15 each.

BDO Simpson Xavier updated its valuation on the shares to €62.59 at the end of March on the basis of the group's performance in 2005 and in the first three months of this year, he said. With 613,500 fully paid-up shares in issue, such a valuation implies that the group is worth €38.398 million.

ADM Londis uses its ownership structure to recruit store owners from rival chains. "Retailers are choosing Londis, not only for our brand offering, but because Londis retailers can own shares in the group and realise a market value for their holding," Mr O'Riordan said.

"The market is likely to become even more competitive in 2006 in light of the aggressive expansion plans of the multiples and the abolition of the Groceries Order."

The increase in pretax profits at Londis last year was achieved on the back of an 11.1 per cent rise in the group's wholesale turnover to €336 million, net of value added tax.

The increase in wholesale sales was just above twice the rate of increase in 2004, which was 5.5 per cent.

The Londis group had 337 stores at the end of 2005, 31 more than a year previously. Mr O'Riordan said that this currently stood at above 340. He added that 43 stores joined the network in 2005, while 12 had left.

Chief among the arrivals into the network were six stores in the Griffin chain in Dublin, which left the Musgrave-SuperValu-Centra network last August. This chain, controlled by businessman Séamus Griffin and his brother Ger, now has 11 stores.

Mr O'Riordan said that Londis had two other "sizeable" franchisees, but he declined to name them. Londis stores had a combined retail turnover of €677 million last year.

Mr O'Riordan said like-for-like turnover rose 6 per cent, stripping out the contribution from new and departing stores. The overall turnover rose 11.2 per cent, he said.

Londis sales of €677 million compare with €1.035 billion at 382 Centra outlets last year and sales of €1.82 billion at Musgrave's network of 171 large-format SuperValu stores.

Spar, which has 415 outlets, had sales of more than €1.1 billion.