National Grid 2016 Annual Report Download - page 171

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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 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.
J. Directors’ remuneration
Full details of Directors’ remuneration are disclosed on pages
68to81.
Financial Statements
169National Grid Annual Report and Accounts 2015/16 Financial Statements