for the year ended 31 March 2008

1. Accounting Policies

(i) Basis of Preparation
The financial statements are prepared under the historical cost convention and in accordance with applicable accounting standards. British Energy Group plc's financial statements have been prepared in accordance with accounting principles generally accepted in the United Kingdom and are therefore being presented separately from the consolidated financial statements of the British Energy Group, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and International Financial Reporting Interpretations Committee (IFRIC) interpretations.

References to the Company are to British Energy Group plc, the ultimate holding company of the British Energy Group. References to the Group are to the Company and its subsidiaries. These financial statements cover the financial year from 1 April 2007 to
31 March 2008, with comparative figures for the financial year from 1 April 2006 to
31 March 2007.

In preparing the financial statements for the current year, British Energy Group plc has adopted FRS 29 - Financial Instruments: Disclosures (FRS 29). British Energy Group plc is exempt from the requirements of FRS 29 because the Company is included in the British Energy Group plc's publicly available consolidated financial statements for the year ended
31 March 2008, which include disclosures that comply with IFRS 7 - Financial Instruments: Disclosures (IFRS 7), the equivalent International Financial Reporting Standard.

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results can differ from those estimates.

In accordance with FRS 18 - Accounting Policies, the Directors have reviewed British Energy Group plc's accounting policies and confirm that they are the most appropriate.
A number of the policies require British Energy Group plc to use a variety of estimation techniques. Significant factors considered when assessing the carrying value of assets include future electricity prices, expected annual output, expected station operating costs, remaining station lives and discount rates.

British Energy Group plc has taken advantage of the exemption under Section 230 of the Companies Act 1985 from presenting a profit and loss account, statement of total recognised gains and losses and cash flow statement. Accordingly neither a profit and loss account, statement of total recognised gains and losses, nor a cash flow statement is presented in these financial statements.

(ii) Fixed Asset Investments
Investments in subsidiaries are initially recorded at the cost of shares allotted. Fixed asset investments are stated at cost less provisions for diminution in value. The carrying value of all fixed asset investments is regularly assessed for permanent impairment and provision made, if appropriate.

(iii) Taxation
Current tax is provided at amounts expected to be paid or recovered using the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is recognised on all timing differences that have originated but not reversed by the balance sheet date. Timing differences are differences between taxable profits and those stated in the financial statements. Deferred tax is measured, on an undiscounted basis, at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets are only recognised to the extent that it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing difference can be deducted.

Deferred tax is recognised in the profit and loss account except to the extent that it is attributable to a gain or loss that is or has been recognised directly in the statement of total recognised gains and losses in which case the deferred tax is recognised directly in that statement.

(iv) Share-based Payment
British Energy Group plc has five share compensation schemes, the Share Incentive Plan, the Deferred Incentive Plan, the Long-Term Deferred Bonus Plan, the Executive Share Option Plan 2004 and the Interim Bonus Plan. British Energy Group plc accounts for its share compensation schemes in accordance with FRS 20 - Share-based Payment.

British Energy Group plc issues equity-settled share-based payments to certain employees of its subsidiaries under the terms of the Company's various employee share compensation schemes. The fair value of the share compensation schemes is recognised in investments with the corresponding credit included in shareholders' equity.