IFRS to boost Transco's profits.
National Grid said in a statement that adopting IFRS (International Financial Reporting Standard) was expected 'to lead to an increase in reported operating profit, profit before tax and earnings per share and a reduction in reported net assets'.
The IFRS is designed to give investors more transparencyabout a company's finances. The new measure arrived in the wake of accounting scandals at US energy group Enron and telecoms company WorldCom between 2001 and 2002.
The company will recalculate its figures for the year ended March 31, 2004, and the new standards are expected to boost underlying pretax profit by 39 per cent to pounds 1.935 billion and earnings per share by 36 per cent to 46 pence.
National Grid shares rose as much as 1.5 percent to 502 pence following the statement.
The IFRS system took effectacross Europe in January. National Grid said it would adopt the accounting measure in the financial year starting April 1, 2005.
Mr Lucas said the principal boost to its reported earnings would arise from a change in how National Grid accounts for the cost of maintenance work on its gas mains.
Under IFRS, rather than having these costs come out of National Grid's profit and loss account, the costs will be capitalised and depreciated.
National Grid added that adopting IFRS would not affect the cash-flow of its business