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British supermarket group Somerfield unveiled a 63 percent increase in profits as it said talks with potential takeover parties had reached an advanced stage.

The improved annual performance came after the Bristol-based company embarked on its largest-ever program of refits and opened new stores as part of a drive to capture more of the market for convenience store shopping.

It said current trading conditions were challenging, but said the decline in like-for-like sales at Somerfield-branded stores had narrowed to 0.7 percent in the nine weeks to July 2, from 1.2 percent over the previous six months.

Somerfield said that "substantial progress" had been made by parties interested in buying the group -- a takeover saga that dates back to a failed £1bn bid from Icelandic retail investment group Baugur last February.

Baugur remains part of a consortium mulling over a bid for Somerfield. A second group is said to feature London & Regional Properties and Japanese bank Nomura.

Somerfield reported profits before one-off costs of £53.1m on sales of £5.2bn.

Among the changes, Somerfield withdrew its Kwik Save brand from Scotland and converted another 76 Kwik Save stores to the Somerfield brand.

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