National Grid 2008 Annual Report Download - page 596

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 34370
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 74
Description: EXHIBIT 15.1
0/7270.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/270/7*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 34370
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-15.1, Doc: 16, Page: 74 Description: EXHIBIT 15.1
0/7270.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/270/7*
Table of Contents
82
Accountin
g
p
olicies
National Grid plc
Accounting policies
Basis of accounting
The consolidated financial statements present our results for
the years ended 31 March 2008, 2007 and 2006 and our
financial position as at 31 March 2008 and 2007. They have
been prepared using the accounting policies shown, in
accordance with International Financial Reporting Standards
(IFRS).
In complying with IFRS, we are also complying with the
version of IFRS that has been endorsed by the European
Union for use by listed companies.
IFRS differ from both US Generally Accepted Accounting
Principles (US GAAP) and UK Generally Accepted
Accounting Principles (UK GAAP). Following a rule change
by the US Securities and Exchange Commission we no
longer provide a reconciliation from our results and financial
position as prepared under IFRS to the results and financial
position as if they had been prepared in accordance with US
GAAP.
Choices permitted under IFRS
Since 1 April 2005 we have presented our consolidated
financial statements in accordance with IFRS. We were
required to make a number of choices on the adoption of
IFRS and in addition we continue to choose from certain
options that are available within accounting standards.
The principal choices made on the adoption of IFRS, which
cannot be changed, were as follows:
Transition
date
Our opening IFRS balance sheet was established
as at 1 April 2004. As a consequence goodwill
amortisation ceased on this date and we used
certain balances in our previous UK GAAP
financial statements as the basis for our opening
IFRS balance sheet.
Business
combinations
Business combinations prior to 1 April 2004 were
not changed retrospectively. In particular, we
retained the use of merger accounting for the
business combination with Lattice Grou
p
.
Financial
instruments
We adopted IAS 39 on 1 April 2005. We chose to
apply IAS 39 prospectively from that date and
accordingly did not restate prior periods. As a
consequence, the accounting for financial
instruments differs from that which would have
been
p
resented had we alwa
y
s a
pp
lied IAS 39.
Carrying value
of assets at
transition
In most cases, we used brought forward
depreciated cost, as adjusted for changes in
accounting policies to conform with IFRS, to be
the o
p
enin
g
carr
y
in
g
value under IFRS.
Share-based
payments
We recognised all active share option grants
retrospectively.
Cumulative
translation
differences
We chose to measure and present cumulative
translation differences arising since 1 April 2004
only.
Significant choices that we continue to make on an ongoing
basis include the following:
Accounting standards and interpretations adopted in
2007/08
In preparing our consolidated financial statements we have
complied with International Financial Reporting Standards,
International Accounting Standards and interpretations
applicable for 2007/08. The following amendments to
standards and interpretations were adopted during 2007/08,
none of which resulted in a material change to our
consolidated results, assets or liabilities in 2007/08 or in
those of previous periods:
Presentation
formats
We use the nature of expense method for our
income statement and total our balance sheet to
net assets and total equity.
In the income statement, we present subtotals of
total operating profit, profit before tax and profit
from continuing operations, together with
additional subtotals excluding exceptional items,
remeasurements and stranded cost recoveries.
Exceptional items, remeasurements and stranded
cost recoveries are presented on the face of the
income statement.
Pensions
We recognise actuarial gains and losses each year
in the statement of recognised income and
expense.
Joint ventures
We use equity accounting for jointly controlled
entities instead of the alternative proportional
consolidation method.
Capitalised
interest
We capitalise interest into the cost of assets that
we construct, where conditions of IAS 23 are met.
Capital
contributions
Contributions received towards capital
expenditure are recorded as deferred income and
amortised in line with the depreciation on the
associated asset.
Timing of
goodwill
impairment
reviews
Goodwill impairment reviews are carried out
annually in the final quarter of the financial year.
Financial
Instruments
We normally opt to apply hedge accounting in
most circumstances where this is permitted. For
net investment hedges, we have chosen to use the
spot rate method, rather than the alternative
forward rate method.
Individual
accounts
We have chosen to continue to use UK GAAP,
rather than IFRS, in the individual financial
statements of National Grid plc and of UK
subsidiar
y
com
p
anies.
New
interpretations
IFRIC 8, IFRIC 9, IFRIC 10 and IFRIC 11 contain
guidance on accounting for share-based exchange
transactions, embedded derivatives, impairments
in half yearly reports and share-based payments.
Implementation of these interpretations did not
have a material impact on our results, assets or
liabilities.