John Lewis Partnership plc annual report and accounts 2012

21 Deferred tax (continued)

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future profits is probable. There were no unrecognised deferred tax assets in respect of losses for the year ended 28 January 2012 (2011: £nil).

The deferred tax balance associated with the pension deficit has been adjusted to reflect the current tax benefit obtained in the financial year ended 30 January 2010 following the contribution of the limited partnership interest in JLP Scottish Limited Partnership to the pension scheme (see note 24).

All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax liability at 28 January 2012 was £32.1m (2011: £94.7m). The net deferred tax liability is due after more than one year.

22 Management of financial risks

The principal financial risks to which the Partnership is exposed are liquidity risk, interest rate risk, foreign currency risk, credit risk, capital risk and energy risk. These risks are managed as follows:

Liquidity risk

Liquidity requirements are managed in line with short and long-term cash flow forecasts and reviewed against the Partnership’s debt portfolio and maturity profile. At the year end the Partnership had undrawn committed revolving borrowings facilities of £310m (2011: £310m), £40m to October 2012, £30m, which was extended from August 2012 to August 2013, and £240m to September 2013. In addition to these facilities, the Partnership has listed bonds totalling £817m, £142m of which matured on 30 January 2012, £100m in 2014, £275m in 2019 and £300m in 2025, together with a term loan of £100m, which was extended from March 2011 to December 2012, and the Partnership bond issued in April 2011 and maturing in 2016, which raised gross proceeds of £58m. The bonds are not subject to repricing, and their interest rates and maturity profiles are set out in note 25.

The Partnership’s bank borrowing facilities each contain one financial covenant, based on fixed charge cover. The minimum covenant that applies is that consolidated EBITDAR shall not be less than 2.5 times rent adjusted total net interest costs. Throughout the year the Partnership maintained comfortable headroom against this covenant and is expected to do so into the foreseeable future.

The Partnership’s total committed sources of funds at the date of signing these accounts are £1,143m.

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