John Lewis Partnership plc annual report and accounts 2012

Notes to the accounts

 1 Accounting policies

Accounting convention and basis of consolidation

The accounts are prepared under the historical cost convention, with the exception of certain land and buildings which are included at their revalued amounts and financial assets and financial liabilities (including derivative instruments) valued at fair value through profit and loss, and in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated income statement and balance sheet include the accounts of the company and all its subsidiary undertakings.

Business components that represent major lines of business or geographical areas of operations are recognised as discontinued if the operations have been disposed of, are being abandoned or meet the criteria to be classified as held for sale.

The preparation of consolidated financial statements in conformity with International Financial Reporting Standards requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

These policies have been consistently applied to all the years presented unless otherwise stated.

The following standards, amendments and interpretations were adopted by the group from 30 January 2011 and have not had a significant impact on the group’s profit for the year, equity or disclosures:

– IAS 24 (revised) ‘Related party disclosures’.

– Amendment to IFRIC 14, ‘IAS 19 – The limit on a defined benefit asset, minimum funding requirements and their interaction’.

– Annual improvements 2010.

There are a number of new accounting standards and amendments to existing standards that have been published and are applicable for the group’s accounting periods beginning on or after 29 January 2012 or later periods, but which the group has not adopted early. These are as follows:

– IFRS 9 ‘Financial Instruments’. – IFRS 10 ‘Consolidated financial statements’. – IFRS 11 ‘Joint arrangements’. – IFRS 12 ‘Disclosure of interests in other entities’. – IFRS 13 ‘Fair value measurement’. – Amendment to IFRS 7 ‘Financial instruments: Disclosures’ on derecognition. – Amendment to IAS 12 ‘Income taxes’ on deferred tax. – Amendment to IAS 1 ‘Presentation of financial statements’. – Amendment to IAS 19 ‘Employee Benefits’.

Except for the Amendment to IAS 19, these are not expected to have a material impact on the group’s profit or equity for future years, but may affect disclosures. The Amendment to IAS 19 will replace the expected return on pension scheme assets and the interest cost on pension scheme liabilities with a net interest expense or income calculated by applying the liability discount rate to the net defined benefit asset or liability. This will result in an increase in finance costs but will not impact on total equity.

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