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John Lewis Partnership plc Annual Report and Accounts 2014


DIRECTORS’ REPORT


The Directors present their report and the audited financial statements for the year ended


25 January 2014. Directors are required to make a statement on key events during the Partnership’s year, confirming the state of the business and certifying that it is being run responsibly.


Principal activity and future


developments The Partnership’s principal activity is retailing, with the main trading operations being the Waitrose and John Lewis businesses. The Company controls the entities listed in note 36, comprising John Lewis department stores, John Lewis at home stores, johnlewis.com, a liaison office in Gurgaon, India, Waitrose supermarkets, Waitrose convenience stores, waitrose.com, business to business contracts in the UK and abroad and ancillary manufacturing activities (together the Partnership). An indication of likely future developments in the Partnership can be found on page 45.


Corporate governance The Partnership’s statements on corporate governance can be found in the Governance Report on pages 50 to 79 of these financial statements. These also include the Audit and Risk Committee Report, the Chairman’s Nominations Committee Report and Remuneration Report. The Governance Report forms part of this Directors’ Report.


Going concern After reviewing the Partnership’s operating budgets, investment plan, financing arrangements and possible financial risks, the Directors consider that the Partnership has adequate financial resources to continue in operation for the foreseeable future.


A full description of the Partnership’s business activities, financial position, cash flows, liquidity position, committed facilities and borrowing position, together with the factors likely to affect its future development and performance, are set out in the Strategic Report. The Partnership has, at the date of this report, sufficient financing available for its estimated requirements for the foreseeable future and, accordingly, the Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the financial statements.


Dividends No dividends were paid on the Deferred Ordinary Shares (2013: nil).


Dividends on Preference stocks were £222,000 (2013: £222,000). Dividends on SIP Shares (issued in connection with BonusSave) were £1,712,000 (2013: £1,857,000).


Directors’ interests Under the Constitution of the Partnership, the Executive Directors, Elected Directors and Partners’ Counsellor, as employees of John Lewis plc, are necessarily interested in the 612,000 Deferred Ordinary Shares in John Lewis Partnership plc, which are held in trust for the benefit of employees of John Lewis plc and certain other companies.


Any conflicts of interest are disclosed on page 59 and details of the Directors’ service agreements and notice periods are given on page 76.


Employees The Constitution of the Partnership provides for the democratic involvement of employees (our “Partners”) as co-owners of the business. Partners are provided with extensive information on all aspects of business operations and are encouraged to take an active interest in promoting its commercial success. Further information regarding the Partnership’s policies in relation to diversity and applications for employment made by disabled persons and provisions for disabled Partners are provided below.


BonusSave The Partnership operates BonusSave, a Share Incentive Plan (‘the Plan’), which is available to all Partners and has been approved by HMRC. In conjunction with the announcement of the annual results, all Partners are invited to enter into a savings contract to save up to a maximum of £4,500, in any one year, in the Plan. The Plan allows for the investment made by Partners to be held in shares in the Partnership, in a class created specifically for this purpose known as SIP Shares. Details of SIP Shares can be found in note 16. The SIP Shares do not carry voting rights, cannot be sold or transferred out of the Partnership and are, at all times, held in trust for the benefit of the respective Partners in the name of John Lewis Partnership Trust Limited.


Employment All employees can benefit from the Partnership’s training and development policies, and further information can be found on page 15. The Partnership recruits people with disabilities to suitable vacancies on merit. Where disability occurs during the period of employment, every effort is made to continue to provide suitable employment with the provision of appropriate training.


The Partnership seeks to embrace diversity and this is reflected in all we do. The Board is therefore committed to providing equal opportunities for all in employment at all levels of the organisation, regardless of individual differences such as gender and ethnic origin.


Human Rights The Partnership recognises its responsibility to respect human rights, in particular those expressed in the International Bill of Human Rights and the principles concerning fundamental rights set out in the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work.


Central to this recognition is Principle 1 of the Partnership Constitution: ‘The Partnership’s ultimate purpose is the happiness of all its members, through their worthwhile and satisfying employment in a successful business’ and Section 2 covering Partners rights and responsibilities. In addition, rule 96 of the Partnership Constitution states ‘the Partnership expects its suppliers to obey the law and to respect the wellbeing of their employees, their local communities and the environment’.


All own-brand suppliers are required to comply with the Partnership Responsible Sourcing Code of Practice (“the Code”), as set out in our Terms and Conditions of Purchase. The code is based on the Ethical Trading Initiative Base Code and on the conventions of the International Labour Organisation. The Partnership expects its suppliers to have policies and procedures in place to ensure compliance with the code and as such potential and existing supplier sites are monitored regularly through independent ethical audits. Where non-compliances are found, remedial action is undertaken to mitigate them. The Partnership also undertakes capacity- building and training programmes with its suppliers to ensure long term improvements to working conditions in its supply chain.


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