National Grid 2014 Annual Report Download - page 140

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30. Financial risk management continued
(a) Credit risk continued
Offsetting financial assets and liabilities
The following tables set out our financial assets and liabilities which are subject to offset and to enforceable master netting arrangements
orsimilar agreements. The tables show the amounts which are offset and reported net in the statement of financial position. Amounts
which cannot be offset under IFRS, but which could be settled net under terms of master netting agreements if certain conditions arise,
and with collateral received or pledged, are shown to present National Grid’s net exposure.
Financial assets and liabilities on different transactions are only reported net if the transactions are with the same counterparty, a legal
right of offset exists and the cash flows are intended to be settled on a net basis.
Amounts which do not meet the criteria for offsetting on the statement of financial position but could be settled net in certain circumstances
principally relate to derivative transactions under ISDA (International Swaps and Derivatives Association) agreements where each party
has the option to settle amounts on a net basis in the event of default of the other party.
Commodity contracts that have not been offset on the balance sheet may be settled net in certain circumstances under ISDA or NAESB
(North American Energy Standards Board) agreements.
National Grid has similar arrangements in relation to bank account balances and bank overdrafts; and trade payables and trade
receivables which are subject to general terms and conditions. However, these balances are immaterial.
Related amounts available
to be offset but not offset in
statement of financial position
As at 31 March 2014
Gross
carrying
amounts
£m
Gross
amounts
offset1
£m
Net amount
presented
in statement
of financial
position
£m
Financial
instruments
£m
Cash
collateral
received/
pledged
£m
Net amount
£m
Assets
Derivative financial instruments 1,970 –1,970 (609) (831) 530
Commodity contracts 89 (2) 87 (7) (2) 78
2,059 (2) 2,057 (616) (833) 608
Liabilities
Derivative financial instruments (1,163) –(1,163) 609 374 (180)
Commodity contracts (123) –(123) 7 – (116)
(1,286) –(1,286) 616 374 (296)
Total 773 (2) 771 –(459) 312
Related amounts available
to be offset but not offset in
statement of financial position
As at 31 March 2013
Gross
carrying
amounts
£m
Gross
amounts
offset1
£m
Net amount
presented
in statement
of financial
position
£m
Financial
instruments
£m
Cash
collateral
received/
pledged
£m
Net amount
£m
Assets
Derivative financial instruments 2,245 –2,245 (891)2(709) 645
Commodity contracts 91 (2) 89 (1) –88
2,336 (2) 2,334 (892) (709) 733
Liabilities
Derivative financial instruments (1,681) –(1,681) 8912440 (350)
Commodity contracts (140) 1(139) 1 – (138)
(1,821) 1(1,820) 892 440 (488)
Total 515 (1) 514 –(269) 245
1. The gross financial assets and liabilities offset in the statement of financial position primarily relate to commodity contracts. Offsets relate to margin payments for NYMEX gas futures which
are traded on a recognised exchange.
2. Comparatives have been restated to present items on a basis consistent with the current year.
Notes to the consolidated
financial statements continued
138 National Grid Annual Report and Accounts 2013/14