National Grid 2014 Annual Report Download - page 157

Strategic Report Corporate Governance Financial Statements Additional Information
We are required to include the stand-alone balance sheet
ofour ultimate parent Company, National Grid plc, under
theCompanies Act 2006. This is because the publicly
tradedshares are those of National Grid plc and the following
disclosures provide additional information toshareholders.
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 2006. They
have been prepared on an historical cost basis, except for the
revaluation of financial instruments, and are presented in pounds
sterling, which is the currency of the primary economic environment
in which the Company operates. The 2013 comparative financial
information has also been prepared on this basis.
These individual financial statements have been prepared on a
going concern basis following the assessment made by the
Directors as set out on page 52.
The Company has not presented its own profit and loss account
as permitted by section 408 of the Companies Act 2006.
The Company has taken advantage of the exemptions in FRS 8
‘Related Party Disclosures’ from disclosing transactions with other
members of the National Grid plc group of companies.
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.
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 timing 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 foreign currencies are
retranslated at closing exchange rates. Gains and losses arising
on retranslation of monetary assets and liabilities are included in
the profit and loss account.
E. Financial instruments
The Company’s accounting policies under UK GAAP, namely
FRS25 ‘Financial Instruments: Presentation’, FRS 26 ‘Financial
Instruments: Measurement’ and FRS 29 ‘Financial Instruments:
Disclosures’, are the same as the Group’s accounting policies
under IFRS, namely IAS 32 ‘Financial Instruments: Presentation’,
IAS 39 ‘Financial Instruments: Recognition and Measurement’ and
IFRS 7 ‘Financial Instruments: Disclosures’. The Company applies
these policies only in respect of the financial instruments that it
has, namely investments, derivative financial instruments, debtors,
cash at bank and in hand, borrowings and creditors.
The policies are set out in notes 13, 15, 17, 18, 19 and 20 to the
consolidated financial statements. The Company is taking the
exemption for financial instruments disclosures, because IFRS 7
disclosures are given in notes 30 and 33 to the consolidated
financial statements.
F. Hedge accounting
The Company applies the same accounting policy as the Group
inrespect of fair value hedges and cash flow hedges. This policy
isset out in note 15 to the consolidated financial statements.
G. Parent Company guarantees
The Company has guaranteed the repayment of the principal sum,
any associated premium and interest on specific loans due by
certain subsidiary undertakings primarily to third parties. In the event
of default or non performance by the subsidiary, the Company
recognises such guarantees as insurance contracts, at fair value
with a corresponding increase in the carrying value of the investment.
H. Share awards to employees of subsidiary
undertakings
The issuance by the Company to employees of its subsidiaries of
agrant over the Company’s options represents additional capital
contributions by the Company to its subsidiaries. An additional
investment in subsidiaries results in a corresponding increase in
shareholders’ equity. The additional capital contribution is based
on the fair value of the option at the date of grant, allocated over the
underlying grant’s vesting period. Where payments are subsequently
received from subsidiaries, these are accounted for as a return of
a capital contribution and credited against the Company’s
investments in subsidiaries. The Company has no employees.
I. Dividends
Interim dividends are recognised when they are paid to the
Company’s shareholders. Final dividends are recognised when
they are approved by shareholders.
Company accounting policies
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