Right now I'm trawling through the FTSE 100 (UKX) and double-checking for blue chips that may be flattering their profits.

You see, many companies these days report "underlying" earnings, which are calculated by excluding costs the firm deems to be "exceptional." Trouble is, some companies are more cavalier than others when it comes to sweeping awkward expenses away from the headline figures.

Today I'm looking at National Grid (LSE: NG.L) (NYSE: NGG) to see if its reported earnings have been distorted significantly by exceptional, one-off, or unusual items. I've extracted the following statistics:

Year to March 31






Profit before unusual items (£m)






Restructuring charges (£m)






Gain on sale of investments (£m)






Other unusual items (£m)






Source: S&P Capital IQ

While annual figures can provide some insight into how a business has performed, I reckon looking back over several years provides a better view of possible problems in relation to one-off costs.

So between 2007 and 2011, my stats tell me National Grid reported cumulative profits before exceptional items and tax of £11.6 billion. However, aggregate exceptional costs came to £0.6 billion -- equivalent to a just 5% of cumulative "underlying" profits.

National Grid gets a fairly clean bill of health from this quick analysis. As a utility share, that's not too surprising, as this type of business is often seen as steadier than most.

One-off items going through National Grid's accounts have generally been modest in amount, especially in the last three years. The fact that it has incurred restructuring charges every year is a small area of concern, though, and something shareholders will want to keep one eye on in future sets of results.

Somebody who always studies earnings numbers in detail is Neil Woodford, the U.K.'s leading equity income fund manager. Woodford's portfolios thrashed the FTSE 100 during the 15 years to 2011 and this exclusive Motley Fool report -- which can be downloaded free today -- reviews his favorite blue-chip shares for 2013 and beyond.

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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.