National Grid 2008 Annual Report Download - page 698

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 44202
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: 171
Description: EXHIBIT 15.1
0/4367.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/367/4*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 44202
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: 171 Description: EXHIBIT 15.1
0/4367.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/367/4*
Table of Contents
Annual Report and Accounts 2007/08
179
Company accounting policies
A. Basis of preparation of individual
financial statements under UK GAAP
These individual financial statements of the Company have
been prepared in accordance with applicable UK accounting
and financial reporting standards and the Companies Act
1985.
The individual financial statements of the Company have
been prepared on a historical cost basis, except for the
revaluation of financial instruments.
These financial statements are presented in pounds sterling,
which is the currency of the primary economic environment
in which the Company operates.
The Company has not presented its own profit and loss
account as permitted by section 230 of the Companies Act
1985. The Company has taken the exemption from preparin
g
a cash flow statement under the terms of FRS 1 (revised
1996) ‘Cash flow statements’.
In accordance with exemptions under FRS 8 ‘Related party
disclosures’, the Company has not disclosed transactions
with related parties, as the Company’s financial statements
are presented together with its consolidated financial
statements. Further, in accordance with exemptions under
FRS 29 ‘Financial Instruments: Disclosures’, the Company
has not presented the financial instruments disclosures
required by the standard, as disclosures which comply with
the standard are included in the consolidated financial
statements.
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. Fixed asset investments
Investments held as fixed assets are stated at cost less any
provisions for impairment. Investments are reviewed for
impairment if events or changes in circumstances indicate
that the carrying amount may not be recoverable.
Impairments are calculated such that the carrying value of
the fixed asset investment is the lower of its cost or
recoverable amount. Recoverable amount is the higher of its
net realisable value and its value in use.
C. Taxation
Current tax for the current and prior periods is provided at
the amount expected to be paid (or recovered) using the tax
rates and tax laws that have been enacted or substantively
enacted by the balance sheet date.
Deferred tax is provided in full on timing differences which
result in an obligation at the balance sheet date to pay more
tax, or the right to pay less tax, at a future date, at tax rates
expected to apply when the timin
g
differences reverse based
on tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date. Timing
differences arise from the inclusion of items of income and
expenditure in taxation computations in periods different
from those in which they are included in the financial
statements.
Deferred tax assets are recognised to the extent that it is
regarded as more likely than not that they will be recovered.
Deferred tax assets and liabilities are not discounted.
D. Foreign currencies
Transactions in currencies other than the functional currency
of the Company are recorded at the rates of exchange
prevailing on the dates of the transactions. At each balance
sheet date, monetary assets and liabilities that are
denominated in forei
g
n currencies are retranslated at closin
g
exchange rates.
Gains and losses arisin
g
on retranslation of monetary assets
and liabilities are included in the profit and loss account.
E. Financial instruments
Financial assets, liabilities and equity instruments are
classified according to the substance of the contractual
arrangements entered into. An equity instrument is any
contract that evidences a residual interest in the assets of
the Company after deducting all of its liabilities and is
recorded at the proceeds received, net of direct issue costs.
Loans receivable are carried at amortised cost using the
effective interest rate method less any allowance for
estimated impairments. A provision is established for
impairments when there is objective evidence that the
Company will not be able to collect all amounts due under
the original terms of the loan. Interest income, together with
losses when the loans are impaired are recognised on an
effective interest basis in the profit and loss account.
Current asset financial investments are recognised at fair
value plus directly related incremental transaction costs and
are subsequently carried at fair value on the balance sheet.
Changes in the fair value of investments classified as
available-for-sale are recognised directly in equity, until the
investment is disposed of or is determined to be impaired. At
this time the cumulative
g
ain or loss previously reco
g
nised in
equity is included in net profit or loss for the period.
Investment income on investments classified as available-
for-sale is recognised in the profit and loss account as it
accrues.