Electrical retailing giant DSG said it has identified "a significant fraud operation" at its Paris-based Fotovista warehouse.

French police are investigating what DSG has described as "an isolated incident", and several arrests at the warehouse have already been made.

DSG, which is Europe's biggest electrical retailer and includes Dixons, PC World, and ElectroWorld, said it "currently anticipates that the financial impact of these issues will offset the expected profit contribution of the New Business Division to the Group in the current financial year only".

In related news, DSG said Fotovista is to sell its personal photography businesses, Primaphot SAS and Maine Color SAS in a €22.4m deal.

The acquisition was made by a mixed group of individuals including LFPI Gestion investors, Steve and Jean Emile Rosenblum, Fotovista's Eric Fau, and Primaphot's Audrey Sasson.

Elsewhere, DSG has announced possible plans for its TechGuys to provide support for Vodafone customers.

Vodafone Connectivity Centres will initially set up home in 30 PC World stores across the UK selling its own range of mobile and voice data services.

TechGuys, which entered the UK home PC support market last September, will extend its reach to Vodafone's small business customers if an "agreement in principle" gets the go ahead.

DSG hopes to nearly double its Tech Guys "manpower" over the next three years, and said it will invest £50m in the business.

Tech Guys currently has 3,000 qualified field engineers and technicians on board and faces tough competition from the likes of the US-originated Geek Squad, which has just began offering a similar service in the UK.

Shares in DSG are currently trading at £170 on the London Stock Exchange. ®