Baugur-backed jewellery group Aurum has posted annual sales of £261.7 million, an increase of 7.7 per cent on the year and 7.4 per cent on a like-for-like basis.

Pre-tax profits at the group, whose portfolio includes Goldsmiths, Mappin & Webb, Watches of Switzerland and Mydiamonds.com, grew by£10.4 million to£800,000.

Operating profits fell 2.6 per cent to£9.3 million due to the increased sale of lower margin watches.

Following the refinancing of the business in December 2006, Aurum’s interest payable is down from£19.1 million to£10.1 million, with net debt down from£83.7 million to£80 million.

The financial update comes as speculation mounts about the impact of the collapse of Iceland’s economy on Baugur’s UK retail portfolio. Baugur is Aurum's largest shareholder

Yesterday Baugur chief executive Gunnar Sigurdsson said it would have “no impact” on Baugur’s portfolio of companies if Icelandic banks are forced the sell their overseas assets.

Aurum chief executive Justin Stead said: "The issues reported have no impact on the strength of the Aurum business, its operations or its trading performance. We remain focussed on our long term strategy and our performance throughout Christmas".

Stead said he was "pleased" with the retailer's full year results and that Aurum was "now seeing the benefits of a clear, focussed long term strategy".

He added that in the current year, which began on February 1, first half like-for-like sales grew by 8.9 per cent.

"This was above management expectations in what are evidently challenging trading conditions," he said.

"We are optimistic, but cautious about the Christmas trading period."

Topics