John Lewis Partnership plc Annual Report and Accounts 2014
89 2 Non-GAAP measures
Our financial statements report measures which are required under accounting standards. We also report financial measures which we believe enhance the relevance and usefulness of the financial statements. These are important for understanding underlying business performance and they are described as non-GAAP measures. In this note, we have explained what the non-GAAP financial measures are and why we use them.
2.1 Gross sales
Gross sales represents the amounts receivable by the Partnership for goods and services supplied to customers, net of discounts but including sale or return sales and VAT. This measure shows the underlying sales trend.
2.2 Exceptional items
Items which are both material and non-recurring are presented as exceptional items within their relevant consolidated income statement category. The separate reporting of exceptional items helps provide an indication of the Partnership’s underlying business performance.
2.3 Net debt
Net debt incorporates the Partnership’s consolidated borrowings, bank overdrafts, fair value of derivative financial instruments and obligations under finance leases, less cash and cash equivalents and unamortised bond transaction costs. This measure indicates the overall debt position.
3 Exceptional items
Exceptional items are material, non-recurring items of income and/or expense arising from events or transactions that fall within the activities of the Partnership. We believe these exceptional items are relevant for an understanding of our underlying financial performance, and are highlighted separately on the face of the income statement. This note provides detail of the exceptional item reported.
On 22 August 2013, the Partnership made an announcement regarding holiday pay payments. Following a recent review of the Partnership’s holiday pay policy, it became clear that Partners who receive certain additions to pay, such as premiums for working on Sunday or bank holidays, had not been paid correctly under the Working Time Regulations legislation. The Partnership Board therefore decided to make one-off additional payments to those affected.
An exceptional operating expense has been recorded in the year to 25 January 2014 totalling £47.3m. This reflects costs of £39.3m for payments to Partners and associated expenses for holiday pay dating back to 2006 which had not been calculated correctly. Future pension liabilities have also increased by £8.0m as a result.
THE JOHN LEWIS PARTNERSHIP
OUR PERFORMANCE
GOVERNANCE
FINANCIAL STATEMENTS
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