In 2006, Casino, Rallye’s main subsidiary, significantly improved its operational, managerial, and financial fundamentals. The acceleration of organic sales growth to 3.8%, and a 7.9% improvement in current operating income show greater operational competitiveness both in France and abroad. The rapid implementation of the disposal plan, with €1.9 billion in assets divested, as compared to a target of at least €2 billion by year-end 2007, has contributed to strengthening, on one hand, the financial structure, with a reduction in net financial debt of €1 billion, and on the other hand, the Group’s growth and profitability profile, by refocusing on its most promising assets.

In France, operational projects under way have accelerated sales growth, improved operating margins, and paved the way for enhanced differentiation of the Group’s banners, which will continue to improve into 2007. Abroad, Casino has defined a new profitable growth profile with the sale of its businesses in Poland, the United States, and Taiwan, and a strong focus on priority growth regions, Latin America and South-East Asia.
The model laid out by Casino will be fully deployed in 2007, in order to meet the targets the Group has set: further growth in current operating income, and continued improvements in financial structure.

Groupe Go Sport experienced a mixed year. Its sales performance is positive, with a 6.7% consolidated net sales growth which outperforms the market, but remains insufficient in a context of tight market to cover additional expenses and non-recurring items. The 2007 action plan under way is expected to improve operating income, mainly because of the progressive rise in private labels products, the strong pressure on operating costs, and the closure of non profitable stores.

Finally, the investment portfolio has continued to create value for the Group. It is now worth €511 million, up 25% compared to 2006, mainly due to an increase in the value of its underlying assets. The investment portfolio thus represents a significant and growing contribution to Rallye’s results.

Rallye’s consolidated sales and current operating income grew respectively by 10.2% and 9.0%. Rallye continues to enjoy an excellent cash-flow position, with €1.4 billion in confirmed, unused credit-lines.
This performance has led the Board of Directors to propose to the General Shareholders Meeting of June 6, 2007 a dividend payment of €1.74 per share, up 3.6% compared to the dividend for 2005, and of which an interim dividend of €0.80 per share was made on October 18, 2006.

Finally, I would once again like to express my gratitude to all staff members at Rallye and its subsidiaries, whose outstanding commitment and hard work are essential to our corporate dynamics and enable the Group to face the future with confidence.



Jean-Charles NAOURI