John Lewis Partnership plc annual report and accounts 2012

Directors’ report

 Principal activity and business review

The principal activity of the group is retailing with the main trading operations being the Waitrose and John Lewis businesses. The company controls the entities listed in note 32, comprising 29 John Lewis department stores, 8 John Lewis at home stores, johnlewis.com, 246Waitrose supermarkets, 31Waitrose convenience stores, waitrose.com and business to business contracts in the UK and abroad and ancillary manufacturing activities. A review of the business and likely future developments is included separately in the Chairman’s Statement and Business Review on pages 2 to 25, which forms part of this Directors’ report.

The Partnership’s Constitution and the UK Corporate Governance Code

 The Partnership was founded by John Spedan Lewis in 1929. He established the business to be owned in trust for the benefit of its members. The members and co-owners of the Partnership are its employees, who are known as Partners.

The Partnership is governed according to a written Constitution. The first principle of which states “The Partnership’s ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business. Because the Partnership is owned in trust for its members, they share the responsibilities of ownership as well as its rewards – profit, knowledge and power.”

The co-ownership character of the Partnership is reflected in the respective roles and responsibilities of its three governing authorities, as established by the Constitution: the elected Partnership Council (the representative body of all of the members of the Partnership, which is elected through a democratic election process), the Board of John Lewis Partnership plc (the Partnership Board), and the Chairman. The Partnership Council, as the representative body of the members of the Partnership, entrusts management of the business to the Partnership Board, which delegates day to day management of the business to the Chairman.

In addition to compliance with the system of governance and accountabilities established by its Constitution, the Partnership aims to apply the highest standards of corporate governance and, although not obliged to do so, seeks to conform with the Principles set out in the June 2010 UK Corporate Governance Code in a manner framed to suit its democratic ownership structure. During 2011/12 the Partnership complied with the main principles of the UK Corporate Governance Code with certain exceptions in areas in which the Partnership’s co-ownership model builds appropriate accountability and checks. Further explanations of how the Code’s principles have been applied and details on the alternative governance mechanisms where they have not been applied, is set out below.

Role of the Partnership Board

 The Partnership Board has responsibility for the overall management and performance of the Partnership and the approval of its long-term objectives. In particular, it agrees the Partnership strategy, business plan and annual budgets, including those of the Waitrose and John Lewis Divisions. It monitors performance, including that of the Divisions, against business plans, budgets and forecasts.

The Board comprises fourteen members – the Chairman, the non-executive Deputy Chairman, two further non-executive directors, five members appointed by the Chairman and five elected members nominated by the Partnership Council. The elected directors are required to stand for re-election every three years. The directors of the company at the date of this report are listed on page 28.

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