The consolidated accounts of Signet Group plc and its subsidiary companies ("the Group") are prepared in accordance with generally accepted accounting principles in the UK ("UK GAAP"). These principles differ in certain significant respects from generally accepted accounting principles in the US ("US GAAP"). Application of US GAAP would have affected shareholders' funds and results of operations at and for the 53 weeks ended 2 February 2002, and the 52 weeks ended 27 January 2001 and 29 January 2000 to the extent summarised in estimated effect on profit for the financial period of differences between UK and US GAAP. The following accounting policies are applied consistently in dealing with items which are considered material in relation to the accounts of the Group:

(a) Basis of preparation
The Group is a speciality jewellery retailer in both the UK and the US.

The consolidated accounts have been prepared in accordance with applicable UK accounting standards and under the UK historical cost convention as modified by the revaluation of freehold and long leasehold properties. The preparation of consolidated accounts in conformity with UK GAAP and US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the accounts and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The consolidated accounts comply with the following Accounting Standards issued by the Accounting Standards Board since the previous accounts:
Financial Reporting Standard ("FRS") 17 - 'Retirement Benefits', transitional rules relating to disclosures have been applied (see note 22);
FRS 18 - 'Accounting Policies', application of this standard has had no significant impact;
FRS 19 - 'Deferred Tax', implementation has resulted in a prior year adjustment as described in note 17.

(b) Consolidation
The Group accounts include the accounts of the Company and its subsidiary undertakings made up for the 53 week period ended 2 February 2002 (the comparatives are for the 52 week periods ended 27 January 2001 and 29 January 2000). Unless otherwise stated, the acquisition method of accounting has been adopted. Under this method, the results of subsidiary undertakings acquired or disposed of in the year are included in the consolidated profit and loss account from the date of acquisition or up to the date of disposal.

Under section 230(3) of the Companies Act 1985 the Company is exempt from the requirement to present its own profit and loss account.

(c) Goodwill
Purchased goodwill (representing the excess of the fair value of the consideration given and associated costs over the fair value of the separable net assets acquired) arising on consolidation in respect of acquisitions since 1 February 1998 is capitalised. Positive goodwill is amortised to nil by equal annual instalments over its estimated useful life, normally 20 years.

In the Company's financial statements, investments in subsidiary undertakings are stated at cost less any impairment in value.

Impairment reviews are carried out to ensure goodwill and intangible assets are not carried at above their recoverable amounts. Wherever events or changes in circumstances indicate that the carrying amount may not be recoverable, the Group performs discounted cash flow analyses to compare discounted estimated future operating cash flows to the net carrying value of goodwill. Any amortisation or impairment write downs identified are charged to the profit and loss account.

(d) Sales
Sales represent sales to customers outside the Group, exclusive of value added and sales taxes.

Revenue from the sale of warranties in the US, such as extended service plans, is recognised at the date of sale. Provision is made for the estimated cost of future claims arising under these service plans.

(e) Cost of sales
Cost of sales includes the cost of goodwill and selling costs. Advertising costs are expensed as incurred.

(f) Foreign currency translation
The results of overseas subsidiary undertakings are translated into £ sterling at the weighted average rates of exchange during the period and their balance sheets and attributable goodwill at the rates at the balance sheet date. Exchange differences arising from the translation of the results, net assets and attributable goodwill of overseas subsidiary undertakings and matched foreign currency borrowings less deposits are charged or credited to reserves. Other exchange differences arising from foreign currency transactions are included in profit before taxation.

(g) Depreciation and amortisation
Depreciation is provided on freehold and long leasehold retail premises over an estimated useful life not exceeding 50 years. Long leaseholds relate to leases that have an original lease term of greater than 25 years. Freehold land is not depreciated.

Premiums paid to acquire short leasehold properties are amortised over their lease periods (up to 25 years) while incentives received are amortised over the period to the first rent review. Depreciation on other fixed assets is provided on a straight line basis at the following annual rates:

Plant, machinery and vehicles - 10%, 20%, 331/3%, Shopfronts, fixtures and fittings - rates up to 331/3%.

(h) Stocks
Stocks represent goods held for resale and are valued at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method and includes appropriate overheads.

(i) Shares in subsidiary undertakings
Shares in subsidiary undertakings are stated at cost, less amounts written off for any impairment in value.

(j) QUEST
The investment in the shares subscribed for by the Group's Qualifying Employee Share Trust ("QUEST") is recorded at nil value.

(k) Leases
Rentals paid under operating leases are charged to the profit and loss account on a straight line basis over the lease term. Amounts payable in respect of turnover leases are recognised in the period to which the turnover relates.

Assets held under finance leases, which are leases where substantially all the risks and rewards of the asset have passed to the Group, are capitalised in the balance sheet and depreciated over their estimated useful lives. Future instalments under such leases, net of finance charges, are included within creditors. Rental payments are apportioned between the finance element, which is charged to the profit and loss account, and the capital element which reduces the outstanding obligation for future instalments.

(l) Deferred taxation
The Group has adopted FRS 19 - 'Deferred Tax' in these financial statements, resulting in a prior year adjustment (see note 17).

Deferred taxation is provided on a full provision basis, without discounting, on all timing differences which have arisen but not reversed at the balance sheet date. Except where otherwise required by UK Accounting Standards no timing differences are recognised in respect of:

	(a)	property revaluation surpluses where there is no commitment to sell the asset,
	(b)	gains on sale of assets where those assets have been rolled over into replacement assets, and
	(c)	additional tax which would arise if profits of overseas subsidiaries were distributed.

(m) Pension schemes
The Group operates a defined benefit pension scheme in the UK, covering two of the executive directors and all participating eligible employees, which provides benefits based on members' salaries at retirement. The assets are held by the trustees of the scheme and are completely separate from those of the Group. The expected cost of the Group's defined benefit scheme is charged to the profit and loss account so as to spread the cost of pensions over the remaining service lives of employees in the scheme. Variations from the regular cost are spread over the expected remaining service lives of current employees in the scheme. The pension cost is assessed in accordance with the advice of independent qualified actuaries. Where appropriate, supplementary pensions and life assurance benefits for UK directors and senior executives are provided through the Signet Group Funded Unapproved Retirement Benefits Scheme. Cash contributions under the Group's US defined contribution 401(k) Retirement Savings Plan are expensed in the profit and loss account as incurred.

Differences between the amounts charged in the profit and loss account and payments to pension plans are treated as assets or liabilities. Deferred tax is accounted for on those assets and liabilities.

(n) Net interest payable and similar charges
Premiums paid in respect of the establishment and maintenance of borrowing facilities or purchased interest rate protection agreements are amortised to interest payable and similar charges over the term of the relevant agreement. All such interest rate protection agreements must be related to an asset or liability and must change the character of the interest rate by converting a variable rate to a fixed rate, or vice versa, to qualify for accrual accounting. In addition the term and notional amount of the swap, cap or floor must not exceed the term and principal amount of the debt or asset. Amounts payable or receivable under such agreements are accrued within net interest payable and similar charges in the profit and loss account and recorded as current assets or liabilities on the balance sheet. If the agreements are terminated early, the gain or loss is spread over the shorter of the remaining term of the original investment or the remaining term of the related debt.

(o) Liquid resources
Liquid resources comprise money market deposits and amounts placed with external fund managers with an original maturity of three months or less, and are carried at cost which approximates to fair value.