John Lewis Partnership plc annual report and accounts 2012
Business review Review of performance (continued)
The assets of the pension funds as at 28 January 2012 were £2,537m (2011: £2,466m) and the accounting liabilities were calculated to be £3,175m (2011: £2,880m). Together, this resulted in an IAS 19 pension fund deficit of £638m (2011: £414m), an increase of £224m (54.1%).
The increase in the pension asset values of 2.9% since last year reflects improving market conditions and the increase in value to the date of sale, in February 2011, of the remaining shares in the Ocado business, which realised £150m. In total £250m was realised from the sale of the Ocado shares for the pension fund.
The main differences between the estimated funding valuation deficit at 28 January 2012 of £10m, for both schemes, and the IAS 19 pension fund deficit of £638m relate to different economic assumptions, principally the rates used to reflect the current value of the scheme’s future liabilities (the discount rate) of £540m, and the exclusion of the fund’s £95m investment in JLP Scottish Limited Partnership for IAS 19 purposes.
The tax charge increased compared with last year reflecting a higher profit before tax and a higher effective tax rate of 27.8% compared to last year’s rate of 26.5% due to an increase in disallowable expenses.
Capital spending in 2011/12 increased by £25m to £518m, an increase of 5.1%.
Waitrose invested £293m, mainly on 29 new branches acquired or built in the year and one relocation, together with 13 refurbishments and one extension. Waitrose has invested in a replacement technology platform for its online business at a total cost of £20m, with £8m of this spent in 2011/12.
John Lewis invested £182m. The mix of investment reflected the business strategy of opening new space, refurbishing key regional shops and investing heavily in the IT and distribution infrastructure to support multi- channel trading. Recent strengthening of the supply chain enabled the business to deliver a particularly strong Christmas online.
In addition, £43m was invested centrally, mainly in maintaining and modernising IT platforms, head office buildings and refurbishing holiday centres.
Cash flow and net debt
We generated £759.1m in operating cash flow (before Partnership bonus) up £14.0m or 1.9% on the prior year. Our gearing ratio increased from 26.5% to 28.7% with year-end net debt increasing by £28.5m to £576.9m.
Graph showing Capital Expenditure
Graph showing Operating cash flow and net debt (£m)
Graph showing Gearing Ratio %