John Lewis Partnership plc annual report and accounts 2013

21 Deferred tax (continued)

Deferred tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future profits is probable. There were no unrecognised deferred tax assets in respect of losses for the year ended 26 January 2013 (2012: £nil).

The deferred tax balance associated with the pension deficit has been adjusted to reflect the current tax benefit obtained in the financial year ended 30 January 2010 following the contribution of the limited partnership interest in JLP Scottish Limited Partnership to the pension scheme (see note 24).

All of the deferred tax assets were available for offset against deferred tax liabilities and hence the net deferred tax asset at 26 January 2013 was £25.6m (2012: £32.1m liability). The net deferred tax asset is recoverable after more than one year.

22 Management of financial risks

The principal financial risks to which the Partnership is exposed are liquidity risk, interest rate risk, foreign currency risk, credit risk, capital risk and energy risk. These risks are managed as follows:

Liquidity risk

Liquidity requirements are managed in line with short and long-term cash flow forecasts and reviewed against the Partnership’s debt portfolio and maturity profile. During the year, the group refinanced £310m bilateral borrowing facilities with a £325m five year syndicated revolving borrowing facility. At the year end the Partnership had undrawn committed revolving borrowings facilities of £325m (2012: £310m). In addition to these facilities, the Partnership has listed bonds totalling £675m of which £100m mature in 2014, £275m in 2019 and £300m in 2025 and the Partnership bond issued in April 2011 and maturing in 2016, which raised gross proceeds of £58m. The bonds are not subject to repricing, and their interest rates and maturity profiles are set out in note 25.

The Partnership’s bank borrowing facility contains one financial covenant, based on fixed charge cover. The minimum covenant that applies is that consolidated EBITDAR shall not be less than 2.5 times rent adjusted total net interest costs. Throughout the year the Partnership maintained comfortable headroom against this covenant and is expected to do so into the foreseeable future.

During the year, a term loan of £100m was repaid at maturity in December 2012 and £142m of bonds were repaid in January 2012.

The Partnership’s total committed sources of funds at the date of signing these accounts are £1,058m.

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