The Group has entered into various interest rate protection agreements, particularly interest rate caps and floors, in order to limit the impact of movements in interest rates on its borrowings. It is the policy of the Group to enter into interest rate protection agreements on at least 75% of its US dollar borrowings. The Group does not hold or issue derivative financial instruments for trading purposes. Details of borrowings are shown in note 16.

The Group also enters into the forward purchase of foreign currencies, principally the US dollar and the Euro, in order to limit the impact of movements in foreign exchange rates on its forecast foreign currency purchases. It is the policy of the Group to ensure that identified foreign currency exposures are hedged to the following levels:

100% - for exposures of less than three months;
75% - for exposures between three and six months; and
50% - for exposures between six and 12 months.

Fair value of financial instruments

These financial instruments involve varying degrees of off-balance sheet market risk whereby changes in interest rates, foreign currency exchange rates or market values of the underlying financial instruments may result in changes in the value of the financial instrument. The Group is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments. It is the policy of the Group only to transact such financial instruments with financial institutions rated 'A' or higher, to ensure that the potential for credit-related losses is minimised. Concentrations of credit risk exist due to the Group operating customer receivables programmes in the US as part of its trading strategy. Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgement, and therefore cannot be determined precisely. Changes in assumptions could significantly affect the estimates. The following methods and assumptions were used to estimate the fair value of each class of financial instrument for which it is practicable to estimate that value:

Interest rate protection agreements
The fair value of the interest rate cap was estimated to be £nil at 2 February 2002 (27 January 2001: £nil).

Forward purchases of foreign currencies
The fair value of outstanding forward purchases of foreign currencies was estimated to be £13,000 at 2 February 2002 (27 January 2001: £50,000). The net carrying amount of these forward purchases at 2 February 2002 was £nil (27 January 2001: £nil) and there were no forward purchases with a negative value at 2 February 2002 (27 January 2001: £nil).

Cash at bank and in hand, and trade accounts payable

The carrying amount is considered to approximate to fair value because of the short maturity of these instruments.

Accounts receivable

Accounts receivable primarily represent credit card receivables. The carrying value of credit card receivables is considered to approximate to fair value because of their short-term nature and the interest rates being used approximating current market origination rates. Other accounts receivables' carrying amounts are considered to approximate to fair value because of the short maturity of these instruments.

Debt

The fair value of the Group's debt is considered to approximate to carrying value at 2 February 2002 since the rates associated with the debt at that time are consistent with the facilities agreements entered into in August 2001 and January 2002. The rates in the facilities agreements are deemed to be current market rates.

Currency profile

The Group's net debt includes the following balances denominated in foreign currency:

		2002		2001
		£m		£m
US dollars ­ cash		40.2		37.1
US dollars ­ debt		(234.6)		(263.0)

At 2 February 2002 the Group was a party to the following interest rate protection agreements:

		Type of
		interest rate		Interest rate
Aggregate nominal amounts		protection		obtained		Term
$ 6m Cap 5.00% Feb 2002		to		Mar		2002
$ 35m Cap 5.00% Mar 2002		to		Apr		2002
$ 59m Cap 5.00% Apr 2002		to		May		2002
$ 44m Cap 5.00% May 2002		to		Jun		2002
$ 54m Cap 5.00% Jun 2002		to		Jul		2002
$ 70m Cap 5.00% Jul 2002		to		Aug		2002
$ 74m Cap 5.00% Aug 2002		to		Sep		2002
$ 84m Cap 5.00% Sep 2002		to		Oct		2002
$111m Cap 5.00% Oct 2002		to		Nov		2002
$135m Cap 5.00% Nov 2002		to		Dec		2002
$ 10m Cap 5.00% Dec 2002		to		Jan		2003
$ 41m Cap 5.00% Jan 2003		to		Feb		2003
At 27 January 2001 the Group was a party to the following interest rate protection agreements:
		Type of
		interest rate		Interest rate
Aggregate nominal amounts		protection		obtained		Term
$ 66m Cap 6.75% Feb 2001		to		Mar		2001
$122m Cap 6.75% Mar 2001		to		Apr		2001
$168m Cap 6.75% Apr 2001		to		May		2001
$160m Cap 6.75% May 2001		to		June		2001
$205m Cap 6.75% June 2001		to		July		2001
$276m Cap 6.75% July 2001		to		Aug		2001
$314m Cap 6.75% Aug 2001		to		Sep		2001
$359m Cap 6.75% Sep 2001		to		Oct		2001
$101m Cap 6.75% Oct 2001		to		Nov		2001
$145m Cap 6.75% Nov 2001		to		Dec		2001