Wales & West Utilities Limited - Directors' report ... - Our Home Page

Principal accounting policiesThe financial statements have been prepared in accordance with Accounting Standards applicable in the UnitedKingdom and comply with the Companies Act 2006. A summary of the principal Group accounting policies, whichhave been consistently applied, is shown below.Changes in accounting policyThere have been no changes in accounting policy during the year.Basis of accountingThese financial statements have been prepared in accordance with the historical cost convention as modified forthe fair valuation exercise undertaken on the acquisition of the gas distribution business and in respect of thevaluation of pension assets and liabilities.The directors are satisfied that the Group has adequate resources to continue in operational existence for theforeseeable future. For this reason they adopt the going concern basis in the preparation of these financialstatements, as set out in the Report of the directors on page 11.Basis of consolidationSubsidiaries are all entities over which the Group has the power to govern the financial and operating policiesgenerally accompanying a shareholding of more than one half the voting rights. Subsidiaries are fully consolidatedfrom the date on which control is transferred to the Group. They are de-consolidated from the date that controlceases.The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group.Inter-company transactions, balances and unrealised gains on transactions between Group companies areeliminated.Acquisitions and disposalsThe results of businesses acquired during the year are dealt with in the financial statements from the date ofacquisition of those businesses. Where appropriate, adjustments are made to bring different accounting policiesof newly acquired companies into line with the existing Group accounting policies.Related party transactionsThe Company is a 100% owned subsidiary of Wales & West Utilities Holdings Limited and is included in theconsolidated financial statements of MGN Gas Networks (UK) Limited. Consequently, under the terms of FRS 8“Related Party Transactions”, the Company is exempt from disclosing related party transactions with entities thatare part of the MGN Gas Networks (UK) Limited group.TurnoverTurnover represents the sales value derived from the distribution of gas together with the sales value derived fromthe provision of other services to customers during the year, is billed on a monthly basis and excludes valueadded tax within the UK.Turnover from the distribution of gas is partially derived from the value of units supplied during the year andincludes an estimate of the value of units supplied between the date of the last meter reading and the year endand from the capacity requested by shippers. No liability is recognised when revenues received or receivableexceed the maximum amount permitted by regulatory agreement and reductions will be made to future prices toreflect any over-recovery.Wales & West Utilities Limited18Registered number: 05046791