diff --git a/grade/report/grader/lib.php b/grade/report/grader/lib.php
index 5cb03cfb408..923aa598a00 100644
--- a/grade/report/grader/lib.php
+++ b/grade/report/grader/lib.php
@@ -138,10 +138,7 @@ class grade_report_grader extends grade_report {
 
         $this->pbarurl = 'index.php?id='.$this->courseid.$perpage.'&';
 
-        // Setup groups if requested
-        if ($this->get_pref('showgroups')) {
-            $this->setup_groups();
-        }
+        $this->setup_groups();
 
         $this->setup_sortitemid();
     }
@@ -417,12 +414,6 @@ class grade_report_grader extends grade_report {
             $html .= $this->print_toggle('averages', true);
         }
 
-        if (has_capability('moodle/grade:viewall', $this->context)
-         and has_capability('moodle/site:accessallgroups', $this->context)
-         and ($course_has_groups = true)) { // TODO replace that last condition with proper check
-            $html .= $this->print_toggle('groups', true);
-        }
-
         $html .= $this->print_toggle('ranges', true);
         if (!empty($CFG->enableoutcomes)) {
             $html .= $this->print_toggle('nooutcomes', true);
@@ -1013,10 +1004,10 @@ class grade_report_grader extends grade_report {
             // Averages heading
 
             $straverage_group = get_string('groupavg', 'grades');
-            $showaverages_group = $this->currentgroup && $this->get_pref('showgroups');
             $straverage = get_string('overallaverage', 'grades');
             $showaverages = $this->get_pref('showaverages');
-
+            $showaverages_group = $this->currentgroup && $showaverages;
+            
             if ($showaverages_group) {
                 $studentshtml .= '<tr class="groupavg r'.$this->rowcount++.'"><th class="header c0" '.$colspan.'scope="row">'.$straverage_group.'</th></tr>';
             }
@@ -1064,7 +1055,7 @@ class grade_report_grader extends grade_report {
 
         if ($grouponly) {
             $straverage = get_string('groupavg', 'grades');
-            $showaverages = $this->currentgroup && $this->get_pref('showgroups');
+            $showaverages = $this->currentgroup && $this->get_pref('showaverages');
             $groupsql = $this->groupsql;
             $groupwheresql = $this->groupwheresql;
             $avgcssclass = 'groupavg';
diff --git a/grade/report/grader/preferences_form.php b/grade/report/grader/preferences_form.php
index f138397c5e1..5b7469e9772 100644
--- a/grade/report/grader/preferences_form.php
+++ b/grade/report/grader/preferences_form.php
@@ -72,7 +72,6 @@ class grader_report_preferences_form extends moodleform {
             if ($canviewhidden) {
                 $preferences['prefshow']['showaverages']  = $checkbox_default;
             }
-            $preferences['prefshow']['showgroups']        = $checkbox_default;
             $preferences['prefshow']['showlocks']         = $checkbox_default;
 
             $preferences['prefrows'] = array(
diff --git a/grade/report/grader/settings.php b/grade/report/grader/settings.php
index dacceedaff4..d3a98956b83 100644
--- a/grade/report/grader/settings.php
+++ b/grade/report/grader/settings.php
@@ -65,9 +65,6 @@ $settings->add(new admin_setting_configcheckbox('grade_report_showeyecons', get_
 $settings->add(new admin_setting_configcheckbox('grade_report_showaverages', get_string('showaverages', 'grades'),
                                             get_string('configshowaverages', 'grades'), 1));
 
-$settings->add(new admin_setting_configcheckbox('grade_report_showgroups', get_string('showgroups', 'grades'),
-                                            get_string('configshowgroups', 'grades'), 0));
-
 $settings->add(new admin_setting_configcheckbox('grade_report_showlocks', get_string('showlocks', 'grades'),
                                             get_string('configshowlocks', 'grades'), 0));
 
diff --git a/grade/report/lib.php b/grade/report/lib.php
index e8fcfc93b75..e82d5cc5823 100755
--- a/grade/report/lib.php
+++ b/grade/report/lib.php
@@ -108,6 +108,12 @@ class grade_report {
      */
     var $currentgroup;
 
+    /**
+     * Current course group mode
+     * @var int $groupmode
+     */
+    var $groupmode;
+
     /**
      * A HTML select element used to select the current group.
      * @var string $group_selector
@@ -294,12 +300,14 @@ class grade_report {
         global $CFG;
 
         /// find out current groups mode
-        $this->group_selector = groups_print_course_menu($this->course, $this->pbarurl, true);
-        $this->currentgroup = groups_get_course_group($this->course);
+        if ($this->groupmode = groups_get_course_groupmode($this->course)) {
+            $this->group_selector = groups_print_course_menu($this->course, $this->pbarurl, true);
+            $this->currentgroup = groups_get_course_group($this->course, true);
 
-        if ($this->currentgroup) {
-            $this->groupsql = " JOIN {$CFG->prefix}groups_members gm ON gm.userid = u.id ";
-            $this->groupwheresql = " AND gm.groupid = $this->currentgroup ";
+            if ($this->currentgroup) {
+                $this->groupsql = " JOIN {$CFG->prefix}groups_members gm ON gm.userid = u.id ";
+                $this->groupwheresql = " AND gm.groupid = $this->currentgroup ";
+            }
         }
     }
 
diff --git a/lib/db/upgrade.php b/lib/db/upgrade.php
index 0a92c8216e8..9cd9be9df7a 100644
--- a/lib/db/upgrade.php
+++ b/lib/db/upgrade.php
@@ -3154,6 +3154,11 @@ function xmldb_main_upgrade($oldversion=0) {
         set_field('grade_items', 'needsupdate', 1, 'needsupdate', 0);
     }
 
+    if ($result && $oldversion < 2007101546.06) {
+        unset_config('grade_report_showgroups');
+        upgrade_main_savepoint($result, 2007101546.06);
+    }
+
     return $result;
 }
 
diff --git a/version.php b/version.php
index b2b098bb7ca..fea117d0420 100644
--- a/version.php
+++ b/version.php
@@ -6,7 +6,7 @@
 // This is compared against the values stored in the database to determine
 // whether upgrades should be performed (see lib/db/*.php)
 
-    $version = 2007101546.05;  // YYYYMMDD      = date of the 1.9 branch (don't change)
+    $version = 2007101546.06;  // YYYYMMDD      = date of the 1.9 branch (don't change)
                             //         X     = release number 1.9.[0,1,2,3,4,5...]
                             //          Y.YY = micro-increments between releases