"Despite very strong growth in the number of units sold, there was a 6.75% reduction in sales revenues to £116 million £124.5 million to 31st December 2004 due to a continuation of the very high levels of price erosion during the period. The levels of price deflation averaged circa 17-20% and overwhelmed the otherwise encouraging first half growth in unit sales. We provided some insight to the marketplace difficulties in our 24th November 2005 trading update statement.

Although we executed well and as intended, pre-tax profits suffered from that imbalance between volume growth, continued pressure on prices and the resultant lower cash value of the sales margins. This reduced last year's pre-tax profit from £1.403 million to £316,000 for the 6 month period to 31st December 2005. This resulted in a fall in gross profit margins from 7.66% to 6.71% and was despite having improved our logistics with a 16% increase in our stock turns.
The resultant effect on our earnings per share was a reduction from last year's 2.92p to 0.63p. The net asset value per share reduced to 99.5p from 102.3p after adjustment for the share repurchases."

Full story here...

http://fool.uk-wire.com/cgi-bin/articles/200603150700187963Z.html

Regards

MrTrousers