Annual Report and Accounts 2016


John Lewis Partnership plc


125


4 Working capital and provisions (continued)


4.2 Trade and other receivables (continued) Accounting policies


Trade receivables: Trade receivables are initially recognised at fair value and subsequently measured at amortised cost less allowances for situations where recovery is doubtful. Such allowances are based on an individual assessment of each receivable.


Supplier income: The price that the Partnership pays suppliers for goods is determined through negotiations with suppliers regarding both the list price and a variety of rebates and discounts. The principal categories of rebate income are in the form of volume and marketing rebates. Supplier income is broadly split evenly between the two categories as follows:


a Volume rebates: Volume rebates are earned based on sales or purchase triggers set over specific periods, such as the number of units sold to customers or purchased from the supplier. Volume rebates are recognised over the period set out in the supplier agreement


a Marketing rebates: Marketing rebates include promotions, mark downs or marketing support provided by suppliers. Marketing rebates are agreed with suppliers for specific periods and products


Rebate income is recognised when the Partnership has contractual entitlement to the income, it can be estimated reliably and it is probable that it will be received.


Rebate income recognised is recorded against cost of sales and inventory, which is adjusted to reflect the lower purchase cost for the goods on which a rebate has been earned. Depending on the agreement with suppliers, rebates invoiced are either received in cash from the supplier or netted off against payments made to suppliers.


For promotions which are confirmed after the balance sheet date, the Partnership is sometimes required to estimate the amounts due from suppliers at the year-end. Estimates of supplier income are accrued within prepayments and accrued income, and are based on a review of the supplier agreements in place and of relevant sales and purchase data.


The majority of rebates are confirmed before the year-end, therefore the level of estimate and judgement required in determining the year-end receivable is limited.


Trade and other receivables


Current: Trade receivables Other receivables


Prepayments and accrued income


Non-current: Other receivables


Prepayments and accrued income


2016 £m


61.0 61.3


101.6 223.9


20.6 45.1 65.7


2015 £m


57.4 58.1 93.1


208.6


16.1 46.6 62.7


Trade receivables are non-interest bearing and generally on credit terms of less than 90 days. Concentrations of credit risk are considered to be very limited. The carrying amount of trade and other receivables approximates to fair value and is denominated in sterling. Within trade receivables is accrued rebate income of £7.8m (2015: £6.5m). Supplier income that has been invoiced but not paid is included in trade receivables and supplier income that has been invoiced but not yet settled against future trade payable balances is included in trade payables. As of 30 January 2016, trade and other receivables of £1.4m (2015: £1.6m) were fully impaired.


The creation and release of the allowance for impaired receivables has been included in branch operating expenses in the income statement. As at 30 January 2016, trade and other receivables of £17.6m (2015: £18.3m) were past due but not impaired. The ageing analysis of the past due amounts is as follows:


Ageing analysis


Up to 3 months past due 3 to 12 months past due Over 12 months past due


2016 £m


15.3 1.0 1.3


17.6


2015 £m


16.5 0.9 0.9


18.3


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