John Lewis Partnership plc Annual Report and Accounts 2014
85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 Accounting policies We prepare our accounts under International Financial Reporting Standards (IFRS) as adopted by the European Union. Below we set out significant accounting policies applied in the current reporting period. The accounting policies are set in line with the requirements of IFRS and there have been no changes in accounting policies in the year other than to pensions accounting as detailed in ‘1.4 Amendments to accounting standards’.
1.1 Basis of preparation
The accounts are prepared under the historical cost convention, with the exception of certain land and buildings which are included at their deemed cost amounts and financial assets and financial liabilities (including derivative instruments) valued at fair value through profit or loss, and in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The preparation of consolidated financial statements in conformity with IFRS 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 year. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. The critical accounting estimates and judgements made by management are disclosed and discussed in section 1.6.
Going concern The Directors, after reviewing the Partnership’s operating budgets, investments plans and financing arrangements, consider that the Company and Partnership have, at the date of this report, sufficient financing available for the estimated requirements for the foreseeable future. Accordingly, the Directors are satisfied that it is appropriate to adopt the going concern basis in preparing the Annual Report and Accounts.
1.2 Basis of consolidation
The consolidated Partnership financial statements incorporate the results for the Company and all its subsidiary undertakings made up to the year end date.
1.3 Subsidiaries
Subsidiary undertakings are all entities over which the Partnership has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights.
All intercompany balances, transactions and unrealised gains are eliminated upon consolidation.
1.4 Amendments to accounting standards
The following policies have been consistently applied to all the years presented unless otherwise stated.
The Partnership has adopted IAS 19 ‘Employee benefits’ (Revised 2011), which amends the accounting for employee benefits. The adoption of the revised standard has been applied on a retrospective basis, and consequently the relevant charges or income in the consolidated income statement and the consolidated statement of comprehensive expense for the year ended 26 January 2013 have been restated.
As a result of the change, the expected return on pension scheme assets and the interest cost on pension scheme liabilities is replaced with a net interest expense or income calculated by applying the discount rate to the net defined benefit liability or asset. This has increased finance costs but has had no impact on equity. Administration costs by pension funds are now recognised as an expense when the administration services are performed.
For the year to 26 January 2013, the effect of the restatement is that the net finance income recognised on the defined benefit retirement schemes of £38.2m has become a net finance cost of £29.1m for the full year. Additionally, operating profit has increased by £1.0m.
IAS 19 ‘Employee benefits’ (Revised 2011) also requires more extensive disclosures, which have been provided in note 22.
The Partnership has adopted IFRS 13 ‘Fair value measurement’ in the year, which aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS. IFRS 13 also requires additional disclosures.
The application of IFRS 13 has not materially impacted the fair value measurements of the Partnership. Additional disclosures and the fair value hierarchy are provided in note 21.
The Partnership has adopted the amendments to IAS 1 ‘Presentation of financial statements’, which requires the Partnership to separate items of other comprehensive income into two distinct categories: items that will not be reclassified subsequently to the income statement; and items that will be reclassified subsequently to the income statement when specified conditions are met.
The following standards, amendments and interpretations were adopted by the Partnership for the year ended 25 January 2014 and have not had a significant impact on the Partnership’s profit for the year, equity or disclosures:
– Amendment to IFRS 7 ‘Financial instruments: disclosures’ on offsetting financial assets and liabilities;
– Amendment to IAS 32 ‘Financial instruments: presentation’;
– Amendment to IAS 39 ‘Financial instruments: recognition and measurement’.
The following standards, amendments and interpretations are not mandatory for the Partnership until 26 January 2014. However the Partnership has decided to early adopt these standards for the year ended 25 January 2014. These standards have not had a significant impact on the Partnership’s profit for the year, equity or disclosures:
– IFRS 10 ‘Consolidated financial statements’; – IFRS 11 ‘Joint arrangements’; – IFRS 12 ‘Disclosure of interests in other entities’.
The following are new accounting standards and amendments to existing standards that have been published and are applicable for the Partnership’s accounting periods beginning on or after 26 January 2014, which the Partnership has not adopted early:
– IFRIC 21 ‘Levies’; – Amendment to IAS 36 ‘Impairment of assets’.
These are not expected to have a material impact on the profit or equity for future years, but may affect disclosures.
THE JOHN LEWIS PARTNERSHIP
OUR PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136