National Grid 2008 Annual Report Download - page 632

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 17041
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: 106
Description: EXHIBIT 15.1
0/8302.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/302/8*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 17041
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: 106 Description: EXHIBIT 15.1
0/8302.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/302/8*
Table of Contents
114
Accountin
g
p
olicies
National Grid plc
Accounting policies
for the year ended 31 March 2008
A. Basis of preparation of consolidated
financial statements under IFRS
National Grid’s principal activities involve the transmission
and distribution of electricity and gas in Great Britain and the
northeastern US. The Company is a public limited liability
company incorporated and domiciled in England, with its
registered office at 1-3 Strand, London WC2 5EH.
The Company has its primary listing on the London Stock
Exchange and is also quoted on the New York Stock
Exchange.
These consolidated financial statements were approved for
issue by the Board of Directors on 14 May 2008.
These consolidated financial statements have been prepared
in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting
Standards Board (IASB) and as adopted by the European
Union. They are prepared on the basis of all IFRS
accounting standards and interpretations that are mandatory
for periods ending 31 March 2008 and in accordance with
the Companies Act 1985 applicable to companies reporting
under IFRS and Article 4 of the European Union IAS
Regulation. The 2007 and 2006 comparative financial
information has also been prepared on this basis.
The consolidated financial statements have been prepared
on a historical cost basis, except for the recordin
g
of pension
liabilities and the revaluation of derivative financial
instruments and certain commodity contracts.
These consolidated financial statements are presented in
pounds sterling, which is the functional currency of the
Company.
Our Ravenswood generation station, KeySpan
Communications and KeySpan Engineering Associates
businesses have been classified as held for sale in the
consolidated balance sheet and as discontinued operations
in the consolidated income statement, in accordance with
our accounting policy I.
As set out in accounting policy T below, prior year business
performance subtotals have been adjusted to reflect the
exclusion of stranded cost recoveries, consistent with the
current year classification.
The preparation of financial statements requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosures of
contingent assets and liabilities and the reported amounts of
revenue and expenses during the reporting period. Actual
results could differ from these estimates.
B. Basis of consolidation
The consolidated financial statements incorporate the
financial statements of the Company and its subsidiaries,
together with a share of the results, assets and liabilities of
j
ointly controlled entities (joint ventures) and associates
usin
g
the equity method of accountin
g
, where the investment
is carried at cost plus post-acquisition changes in the share
of net assets of the joint venture, less any provision for
impairment.
A subsidiary is defined as an entity controlled by the
Company. Control is achieved where the Company has the
power to govern the financial and operating policies of an
entity so as to obtain benefits from its activities. A joint
venture is an entity established to engage in economic
activity, which the Company jointly controls with its fellow
venturers. An associate is an entity which is neither a
subsidiary nor a joint venture, but over which the Company
has significant influence.
Losses in excess of the consolidated interest in joint
ventures are not recognised, except where the Company or
its subsidiaries have made a commitment to make good
those losses.
Where necessary, adjustments are made to bring the
accounting policies used under UK generally accepted
accounting principles (UK GAAP), US generally accepted
accountin
g
principles (US GAAP) or other framework used in
the individual financial statements of the Company,
subsidiaries and joint ventures into line with those used by
the Company in its consolidated financial statements under
IFRS. Inter-company transactions are eliminated.
The results of subsidiaries and joint ventures acquired or
disposed of during the year are included in the consolidated
income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate.
Acquisitions are accounted for using the purchase method,
where the purchase price is allocated to assets and liabilities
on a fair value basis and the remainder recognised as
goodwill.
C. Foreign currencies
Transactions in currencies other than the functional currency
of the Company or subsidiary concerned are recorded at the
rates of exchan
g
e prevailin
g
on the dates of the transactions.
At each balance sheet date, monetary assets and liabilities
that are denominated in foreign currencies are retranslated
at closing exchange rates. Other non-monetary assets are
not retranslated unless they are carried at fair value.
Gains and losses arisin
g
on retranslation of monetary assets
and liabilities are included in the income statement.
On consolidation, the assets and liabilities of operations that
have a functional currency different from the Company’s
functional currency of pounds sterling, principally on US
operations that have a functional currency of US dollars, are
translated at exchange rates prevailing at the balance sheet
date. Income and expense items are translated at the
wei
g
hted avera
g
e exchan
g
e rates for the period. Exchan
g
e
differences arising are classified as equity and transferred to
the consolidated translation reserve.