A summary of the Treasury objectives, policies and strategies together with a description of the Group's interest rate and currency management is set out in pages 27 and 28 of the Finance Director's Review.

For the purposes of the disclosures which follow in this note (other than the currency disclosures), short-term debtors and creditors which arise directly from the Group's operations have been excluded as permitted under FRS13.

(a) Interest rate risk profile
The only financial assets of the Group which earn interest are cash and other liquid funds (see note 18). The interest rate profile of the financial liabilities of the Group by currency denomination as at 30 September 1999 is shown below:

	Total £m	Floating £m	Fixed £m	Weight-ed avg rate at 30 Sept %	Weight-ed avg time for which rate is fixed Years	Total £m	Floating £m	Fixed £m	Weight-ed avg rate at 30 Sept %	Weight-ed avg time for which rate is fixed Years
Sterling Pref. shares	341.4	-	341.4	5.98	3.0	366.4	-	366.4	5.95	3.9
Sterling debt	536.2	93.5	442.7	5.79	8.6	215.8	17.8	198.0	7.63	8.7
US Dollar debt	126.7	-	126.7	7.97	-	122.8	-	122.8	8.48	-
Total	1,004.3	93.5	910.8	6.16	-	705.0	17.8	687.2	6.89	-

Sterling fixed rate liabilities comprise of the Eurobonds described in note 21 and the Preference shares are described in note 25. The weighted average time for which the rate is fixed on the Preference shares has been calculated on the assumption that the Company redeems the shares at the earliest opportunity.

Interest rate contracts entered into which are matched against the £250m Eurobond are described as follows. In February 1999 the bond coupon of 5.625% was swapped to a fixed rate of 4.97% for the period March 1999 to March 2004 and the higher of 5.25% and 6 month Libor plus 0.25% for the period March 2004 to March 2009. In July 1999 a swap for £100m was entered into which swapped the fixed rate of 4.97% into 6 month Libor minus 2.0% for the period March 2000 to March 2002. The bank has the right, exercisable in March 2002, to extend this arrangement to March 2004. In August 1999 an interest rate cap was purchased for the period March 2004 to March 2009 which provides compensation to the extent that 6 month Libor plus 0.25% exceeds 5.625%. At the same time covering the same period a swaption was sold, exercisable in March 2004, which gives the bank the right to pay 5.625% and receive 6 month Libor plus 0.25%. In October 1999 swap contracts were entered into under which Carlton receives 0.97% per annum from October 1999 to March 2009. In March 2009 the bank has the right to enter into a swap whereby it pays sterling 6 month Libor and receives from Carlton 6 month Euribor paid in sterling for a period of 15 years. The contracts entered into after year end have the effect of reducing the weighted average rate on sterling debt from 5.79% as shown in the table above to 5.25%, and in total from 6.16% to 5.90%.

Interest rate contracts entered into which are matched against the £200m Eurobond are described as follows. In August 1999 a swaption was sold, exercisable in June 2001, which gave the bank the right to pay Carlton the bond coupon of 7.625% and receive 6 month Libor plus 0.55% for the period June 2001 until June 2007. In September 1999 swap contracts were entered into under which Carlton receives 0.80% per annum from December 1999 to June 2007. In June 2007 the bank has the right to enter into a swap whereby it pays sterling 6 month Libor and receives from Carlton 6 month Euribor paid in sterling for a period of 15 years.

Dollar fixed rate liabilities comprise of the US$150m Exchangeable Capital Securities and US$65m unsecured borrowings. In February 1999 Carlton entered into a 30 year cancellable swap which matches against the Exchangeable Capital Securities. Under the swap Carlton receives 8% (to match the coupon) and pays the higher of 7.25% or 3 month Libor plus 0.25% (set in arrears or advance at the bank's option and for the period until October 2003 the bank has the choice of sterling or dollar Libor). The swap is cancellable at the bank's option from October 2003 onwards.

The weighted average time for which dollar borrowings and total borrowings are fixed is infinite due to the US$150m Exchangeable Capital Securities which are undated. The remaining dollar borrowings mature in 1.7 years.

The majority of sterling floating rate borrowings resides in interest offset arrangements with UK Clearing banks. Consequently it is netted off against cash for the purposes of interest calculation. The remaining floating rate borrowings bear interest at rates up to UK base rate plus 1%.

(b) Fair values of financial assets and financial liabilities
Set out below is a comparison by category of book values and fair values of the Group's financial assets and financial liabilities as at 30 September 1999.

	As at 30 September 1999		As at 30 September 1998
	Bookvalue £m	Fairvalue £m	Bookvalue £m	Fairvalue £m
Primary financial instruments held or issued to finance the Group's operations:
Overdrafts and short term borrowings (note 20)	(85.2)	(85.2)	(10.6)	(10.6)
Loans (note 21)	(490.4)	(479.8)	(243.5)	(268.2)
Convertible debt (note 22)	(87.3)	(86.3)	(84.5)	(88.3)
Preference shares (note 25)	(341.4)	(442.9)	(366.4)	(416.2)
	(1,004.3)	(1,094.2)	(705.0)	(783.3)
Cash and other liquid funds (note 18)	409.6	409.6	278.8	278.8
Derivative financial instruments held to manage the interest rate and currency profile:
Interest rate swaps, swaptions and caps	-	(8.0)	-	0.2
Derivative financial instruments held or issued to hedge the currency exposure on expected future sales
Forward foreign exchange contracts	-	(3.7)	-	1.9

Market values have been used to determine the fair value of listed Preference shares, debt issued, cash, interest rate and foreign exchange derivatives. Discounted cashflows at market rates have been used to determine the fair value of unlisted debt.

(c) Gains/(losses) on hedging contracts
The table below details gains/(losses) on hedging contracts at 30 September 1999:

	Deferred			Unrecognised
	Gains £m	Losses £m	Total net gains/ (losses) £m	Gains £m	Losses £m	Total net gains/ (losses) £m
Gains/(losses) on hedges at 1 October 1998	2.0	(3.0)	(1.0)	2.1	-	2.1
Gains/(losses) arising in previous years that were recognised in 1999	1.6	(0.4)	1.2	(2.1)	-	(2.1)
	0.4	(2.6)	(2.2)	-	-	-
Gains/(losses) arising in 1999 that were not recognised in 1999	-	-	-	4.3	(16.0)	(11.7)
Gains/(losses) on hedges at 30 September 1999	0.4	(2.6)	(2.2)	4.3	(16.0)	(11.7)
Of which:
Gains/(losses) expected to be recognised in 2000	0.2	(0.4)	(0.2)	4.3	-	4.3
Gains/(losses) expected to be recognised in 2001 or later	0.2	(2.2)	(2.0)	-	(16.0)	(16.0)

(d) Maturity profile
The maturity profile of cash and other liquid funds can be found in note 18. The maturity profile for financial liabilities can be found in notes 20, 21 and 22. The unamortised issue costs associated with the loans and convertible debt are immaterial.

(e) Currency exposures
The table below shows the Group's currency exposures i.e. those transactional (or non-structural) exposures that give rise to the net currency gains and losses recognised in the profit and loss account. Such exposures comprise the monetary assets and monetary liabilities of the Group that are not denominated in the functional currency of the operating unit involved, other than Carlton's dollar borrowings which are treated as hedges of net investments in overseas operations. As at 30 September 1999 these exposures were as follows:

	As at 30 September 1999				As at 30 September 1998
	Net foreign currency monetary assets/(liabilities)				Net foreign currency monetary assets/(liabilities)
	Swiss franc £m	US dollar £m	Other £m	Total £m	Swiss franc £m	US dollar £m	Other £m	Total £m
Functional currency of Group operation
Sterling	98.7	(116.3)	4.2	(13.4)	-	(39.1)	(3.6)	(42.7)
Other	-	-	(1.6)	(1.6)	-	(0.7)	1.2	0.5
Total	98.7	(116.3)	2.6	(15.0)	-	(39.8)	(2.4)	(42.2)