John Lewis Partnership plc Annual Report and Accounts 2014


111


Actual return on assets Interest income on assets


Return on plan assets (less)/greater than discount rate Actual return on assets


22.8 Sensitivity analysis


The net defined benefit obligation is inherently volatile to the financial assumptions used. Illustrated below is the sensitivity of the balance sheet position to changes in key assumptions:


£m % change Liability as at 25 January 2014


Sensitivity of 0.1% increase to: – Discount rate


– Retail price inflation


– Consumer price inflation – Salary increases


Sensitivity of one year increase in life expectancy


22.9 History of experience of gains and losses History of experience of gains and losses


(Losses)/gains on assets % of assets at the end of the year


Experience gains on defined benefit obligation % of defined benefit obligation at the end of the year


22.10 Other arrangements


On 30 January 2010, the Partnership entered into an arrangement with the Pension Scheme Trustees to address an element of the scheme deficit that existed at that time.


The Partnership established two partnerships, JLP Scottish Limited Partnership and JLP Scottish Partnership, which are both consolidated within these Partnership financial statements.


Together with another Partnership company, JLP Scottish Limited Partnership provided sufficient capital to JLP Scottish Partnership to enable it to procure property assets with a market value of £150.9m from other Partnership companies. The Partnership retains control over these properties, including the flexibility to substitute alternative properties. The Properties held in JLP Scottish Partnership have been leased back to John Lewis plc and Waitrose Limited. In September 2011, the Partnership withdrew properties with a market value of £70.0m and substituted these with other properties with a market value of £72.8m.


As a partner in JLP Scottish Limited Partnership, the pension scheme is entitled to an annual share of the profits of the JLP Scottish Limited Partnership each year over 21 years. At the end of this period, the partnership capital allocated to the pension scheme will be reassessed, depending on the funding position of the pension scheme at that time, with a potential value in the range £0.5m to £99.5m. At that point, the Partnership may be required to transfer this amount in cash to the scheme.


Under IAS 19 (revised 2011), the investment held by the pension scheme in JLP Scottish Limited Partnership, a consolidated entity, does not represent a plan asset for the purpose of the Partnership’s consolidated financial statements. Accordingly, the pension deficit position presented in these consolidated accounts does not reflect the £87.9m (2013: £108.0m) investment in JLP Scottish Limited Partnership held by the pension scheme. The distribution of JLP Scottish Limited Partnership profits to the pension scheme is reflected as pension contributions in these consolidated financial statements on a cash basis.


(1,003.4) 78.0


(71.0) (10.0) (20.0)


(130.0)


2014 £m


(49.7) (1.5%) 39.4 0.9%


+ 1.8% – 1.7% – 0.2% – 0.5% – 3.1%


2013


(restated) £m


179.1 6.0% 30.3 0.8%


2014 £m


137.2 (49.7) 87.5


2013


(restated) £m


125.7 179.1 304.8


THE JOHN LEWIS PARTNERSHIP


OUR PERFORMANCE


GOVERNANCE


FINANCIAL STATEMENTS


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