Notes to the consolidated financial statements (continued) 122 John Lewis Partnership plc Annual Report and Accounts 2016


3 Operating assets and liabilities (continued) 3.2 Property, plant and equipment (continued)


Land and buildings


Property, plant and equipment


Cost At 25 January 2014 Additions Transfers Disposals


Transfers to assets held for sale At 31 January 2015 Additions Transfers Disposals


At 30 January 2016


Accumulated depreciation At 25 January 2014 Charge for the year* Disposals


Transfers to assets held for sale At 31 January 2015 Charge for the year* Disposals


At 30 January 2016


Net book value at January 2014 Net book value at January 2015 Net book value at January 2016


£m Fixtures,


fittings and equipment £m


4,034.6 1,738.0 –1.4 210.8


331.0 (64.6) (13.3)


220.5 (42.7)


(135.3) –


4,287.7 1,814.9 –0.6 137.2 (75.1)


4,465.5 1,877.6


(833.4) (1,144.7) (116.6) 21.5 3.8


(165.1) 134.6 –


(924.7) (123.5) 23.4


3,201.2 3,363.0 3,440.7


* Charge for the year ending 30 January 2016 includes an impairment charge of £5.7m to land and buildings (31 January 2015: charge of £10.3m to land and buildings). Included above are land and building assets held under finance leases with a net book value of £20.7m (2015: £24.4m).


In accordance with IAS 36 ‘Impairment of Assets’, the Partnership tests its property, plant and equipment for impairment, whenever events or circumstances indicate that the value on the balance sheet may not be recoverable. For the purpose of impairment testing, each branch is a Cash Generating Unit (‘CGU’).


The impairment test compares the recoverable amount for each CGU to the carrying value on the balance sheet. The key assumptions used in the calculations are the discount rate, long-term growth rate and expected sales performance and branch costs.


The value in use calculation is based on five year cash flow projections using the latest budget and forecast data. Any changes in sales performance and branch costs are based on past experience and expectations of future changes in the market. The forecasts are then extrapolated beyond the five year period using a long-term growth rate. The discount rate is based on the Partnership’s pre-tax weighted average cost of capital of 9% to 10% (2015: 9% to 10%).


Having applied the above methodology and assumptions, the Partnership recognised an impairment charge in the year of £5.7m to land and buildings in the Waitrose Division (2015: £10.3m). The impairment charge reflects the revision of the long-term forecast cash flows as a result of trading in a highly competitive and deflationary market.


A reduction of 0.5% in the long-term growth rate would result in an additional impairment charge of £3.3m (2015: £9.9m). An increase in the discount rate of 0.5% would result in an additional impairment charge of £3.3m (2015: £2.1m).


(1,175.2) (162.5) 73.4


(1,024.8) (1,264.3)


593.3 639.7 613.3


Assets in course of


construction £m


Total £m


192.7 5,965.3 512.7


(541.8) –


(6.2)


(357.7) –


514.1 –


(199.9) (19.5)


157.4 6,260.0 335.6


336.2 –


(117.8) 135.3 6,478.4


– (1,978.1) – (281.7) – –


156.1 3.8


– (2,099.9) – (286.0) –


96.8 – (2,289.1)


192.7 3,987.2 157.4 4,160.1 135.3 4,189.3


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