John Lewis Partnership plc Annual Report and Accounts 2014


103 19 Provisions


We incur liabilities which have some uncertainty regarding the timing or the future cost required to settle them. These are termed provisions and have been estimated and provided for at year end. Our provisions primarily relate to the expected cost of long leave, service guarantees provided to customers, expected customer refunds and insurance claims.


Long leave £m


At 26 January 2013


Charged to income statement Released to income statement


(112.2) (9.2) –


(112.8)


Service guarantee £m


(52.7) (33.6) 10.9


Utilised 8.6 18.0 At 25 January 2014 Of which:


(57.4)


Current (40.1) (22.6) Non-current (72.7) (34.8)


Customer refunds £m


(26.3) (26.2) –


26.3 (26.2)


(26.2) –


Insurance claims £m


(21.5) (13.6) –


9.4 (25.7) (5.7) (20.0)


Other £m


(33.5) (62.9) 5.3


55.1 (36.0)


(26.3) (9.7)


Total £m


(246.2) (145.5) 16.2


117.4 (258.1)


(120.9) (137.2)


The Partnership has a long leave scheme, open to all Partners, which provides up to six months’ paid leave after 25 years’ service. There is no proportional entitlement for shorter periods of service. The provision for the liabilities under the scheme is assessed on an actuarial basis, reflecting Partners’ expected service profiles, and using economic assumptions consistent with those used for the Partnership’s retirement benefit obligations (note 22), with the exception of the discount rate, where a rate appropriate to the shorter duration of the long leave liability is used, so as to accrue the cost over Partners’ service periods.


Provisions for service guarantee costs reflect the Partnership’s expected liability for future repair costs based on estimated failure rates and unit repair costs for the classes of goods sold.


Provision for customer refunds reflects the Partnership’s expected liability for returns of goods sold based on experience of rates of return.


Provisions for insurance claims are in respect of the Partnership’s employer’s, public and vehicle third party liability insurances and extended warranty products.


Provisions for insurance claims are based on reserves held in the Partnership’s captive insurance company, JLP Insurance Limited. These reserves are established using independent actuarial assessments wherever possible, or the reasonable assessment based on past claims experience. Other provisions include reorganisation costs, accrued holiday pay and property related costs.


The exact timing of utilisation of these provisions will vary according to the individual circumstances. However, the Partnership’s best estimate of utilisation is provided above.


THE JOHN LEWIS PARTNERSHIP


OUR PERFORMANCE


GOVERNANCE


FINANCIAL STATEMENTS


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