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@Ammonite
It's exactly as Scilly said. Given that with enough work even the most battered bike can be restored, provided the frame does not have any permanent damage, to price a bike above 300 GBP, it needs to exhibit some extraordinary characteristics. If it's not e.g. a Reynolds 531 f&f, for such a Peugeot, I would expect it to be upgraded to Shimano Arabesque, or full Campagnolo.
Honestly, I have no idea, how the secondary bike market functions in your area, but with the competition around here, it would be next to impossible to get that kind of money. Then again, the fellow at the shop might have a point and you may have more luck posting a classified ad locally.