National Grid 2008 Annual Report Download - page 639

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 26477
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: 112
Description: EXHIBIT 15.1
0/3308.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/308/3*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 26477
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: 112 Description: EXHIBIT 15.1
0/3308.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/308/3*
Table of Contents
120
Accountin
g
p
olicies continued
National Grid plc
W. Cash and cash equivalents
Cash and cash equivalents include cash held at bank and in
hand, together with short-term highly liquid investments with
an ori
g
inal maturity of less than three months that are readily
convertible to known amounts of cash and subject to an
insignificant change in value and bank overdrafts which are
reported in borrowings.
X. Other equity reserves
Other equity reserves comprise the translation reserve (see
accounting policy C), cash flow hedge reserve (see
accounting policy R), available-for-sale reserve (see
accounting policy P) and the merger reserve. The latter
arose as a result of the application of merger accounting
principles under the then prevailing UK GAAP, which under
IFRS 1 was retained for mergers that occurred prior to the
IFRS transition date of 1 April 2004. Under merger
accounting principles, the difference between the carrying
amount of the capital structure of the acquiring vehicle and
that of the acquired business was treated as a merger
difference and included within reserves.
As the amounts included in other equity reserves are not
attributable to any of the other classes of equity presented,
they have been disclosed as a separate classification of
equity.
Y. Dividends
Interim dividends are reco
g
nised when they become payable
to the Company’s shareholders. Final dividends are
recognised when they are approved by shareholders.
Z. Areas of judgement and key sources of
estimation uncertainty
The preparation of financial statements requires
mana
g
ement 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. Information about
such judgements and estimations is contained in the
accounting policies or the notes to the financial statements,
and the key areas are summarised below.
Areas of judgement that have the most significant effect on
the amounts recognised in the financial statements are as
follows:
The categorisation of certain items as exceptional items,
remeasurements and stranded cost recoveries and the
definition of ad
j
usted earnin
g
s
–
notes 4 and 10.
The exemptions adopted on transition to IFRS on 1
April 2004 including, in particular, those relating to
business combinations.
Classification of business activities as held for sale and
discontinued operations – accounting policy I.
Hedge accounting – accounting policy R.
Energy purchase contracts – classification as being for
normal purchase, sale or usage – accounting policy Q
and note 29.
Key sources of estimation uncertainty that have a significant
risk of causin
g
a material adjustment to the carryin
g
amounts
of assets and liabilities within the next financial year are as
follows:
Impairment of goodwill – accounting policy D and note 11.
Review of residual lives, carrying values and impairment
charges for other intangible assets and property, plant
and e
q
ui
p
ment
–
accountin
g
p
olicies E, F and G.
Estimation of liabilities for pension and other post-
retirement benefits – note 5.
Valuation of financial instruments and derivatives – notes
17 and 32.
Revenue reco
g
nition and assessment of unbilled revenue
– accounting policy L.
Recoverability of deferred tax assets – accounting policy
H and note 16.
Environmental and decommissioning provisions – note
24.
Fair values of acquired assets and liabilities – note 28.