National Grid 2016 Annual Report Download - page 170

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 actually those of National Grid plc (the Company) and the following disclosures provide additional
information to shareholders.
A. Basis of preparation
National Grid plc is the parent company of the National Grid Group
which is engaged in the transmission and distribution of electricity
and gas in Great Britain and northeastern US. The Company is a
public limited liability company incorporated and domiciled in England,
with its registered office at 1–3 Strand, London, WC2N 5EH.
The financial statements of National Grid plc for the year ended
31March 2016 were approved by the Board of Directors on
18May2016. The Company meets the definition of a qualifying
entityunder Financial Reporting Standard 100 (FRS 100) issued
bythe Financial Reporting Council. Accordingly these individual
financialstatements of the Company were prepared in accordance
with Financial Reporting Standard 101 ‘Reduced Disclosure
Framework’ (FRS 101). In preparing these financial statements the
Company applies the recognition and measurement requirements
ofInternational Financial Reporting Standards (IFRS) as adopted
bythe EU, but makes amendments where necessary in order to
comply with the provisions of the Companies Act 2006 and sets
outbelow where advantage of the FRS 101 disclosure exemptions
has been taken.
These individual financial statements for the year ended 31 March
2016 are the first prepared in accordance with FRS 101. Accordingly
the date of transition is 1 April 2014. The 2015 comparative financial
information has also been prepared on this basis.
There were no material measurement or recognition adjustments
onthe adoption of FRS 101.
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.
These individual financial statements have been prepared on a
goingconcern basis, which presumes that the Company has
adequate resources to remain in operation, and that the Directors
intend it to do so, for at least one year from the date the financial
statements are signed. As the Company is part of a larger group it
participates in the Group’s centralised treasury arrangements and
so shares banking arrangements with its subsidiaries. The Company
is expected to continue to generate positive cash flows or be in
a position to obtain finance via intercompany loans to continue to
operate for the foreseeable future.
The Directors are not aware of any material uncertainties related
toevents or conditions that may cast significant doubt upon the
Company’s ability to continue as a going concern. Thus they continue
to adopt the going concern basis of accounting in preparing the
annual financial statements.
The Company has not presented its own income statement or
statement of comprehensive income as permitted by section 408
ofthe Companies Act 2006.
The following exemptions from the requirements of IFRS have
beenapplied in the preparation of these financial statements
of theCompany in accordance with FRS 101:
• a cash flow statement and related notes;
• disclosures in respect of transactions with wholly
ownedsubsidiaries;
• disclosures in respect of capital management;
• the presentation of a third balance sheet (being the opening
balance sheet of the Company at the date of application of
FRS101); and
• the effects of new but not yet effective IFRSs.
As the consolidated financial statements of National Grid plc,
whichare available from the registered office, include the equivalent
disclosures, the Company has also taken the exemptions under
FRS101 in respect of certain disclosures required by IFRS 13
‘Fairvalue measurement’ and the disclosures required by IFRS 7
‘Financial instruments: disclosures’. The Company intends to apply
the above exemptions in the financial statements for the year ending
31 March 2017.
There are no critical areas of judgement that are considered to
haveasignificant effect on the amounts recognised in the financial
statements. Key sources of estimation uncertainty that have
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are
thevaluation of financial instruments and derivatives.
The balance sheet has been prepared in accordance with the
Company’s accounting policies approved by the Board and
described below:
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. Tax
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 temporary 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 temporary differences reverse based on tax rates
and tax laws that have been enacted or substantively enacted by
thebalance sheet date. Deferred tax is provided for using the
balancesheet liability method and is recognised on temporary
differences between the carrying amount of assets and liabilities
inthe financial statements and the corresponding tax bases used
inthe computation of taxable profit.
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.
168 National Grid Annual Report and Accounts 2015/16 Financial Statements
Company accounting policies