Directors’ responsibilities and approval

for the year ended 31 March 2007

The directors of Pebble Bed Modular Reactor (Pty) Limited have pleasure in presenting the annual financial statements for the year ended 31 March 2007.

In terms of the South African Companies Act, 1973, and the Public Finance Management Act, 1999 (PFMA) as amended, the directors are required to prepare annual financial statements that fairly present the state of affairs and business of the company at the end of the financial year and of the surplus for that year. To achieve the highest standards of financial reporting, these annual financial statements have been drawn up to comply with International Financial Reporting Standards.

The annual financial statements comprise of the:

The reviews by the Chairman, the Chief Executive and the operational reports discuss the results of the operations for the year and those matters, which are material for an appreciation of the state of affairs and business of the company.

Supported by the Audit, Risk and Finance Committee, the directors are satisfied that the internal controls, systems and procedures in operation provide reasonable assurance that all assets are safeguarded, that transactions are properly executed and recorded, and that the possibility of material loss or misstatement is minimised. The directors have reviewed the appropriateness of the accounting policies, and concluded that estimates and judgements are prudent. They are of the opinion that the annual financial statements fairly present the state of affairs and business of the company at 31 March 2007 and of the surplus for the year to that date. The external auditors, who have unrestricted access to all records and information, as well as to the Audit, Risk and Finance Committee, concur with this statement.

In addition, the directors have also reviewed the cash flow forecast for the year ending 31 March 2008. To date the company has been funded by contributions made by investors (Eskom Holdings Limited, Industrial Development Corporation of South Africa Limited, Westinghouse Electric Company LLC and the South African Government) to allow the company to pursue its objectives as stated under the general review. With effect from 31 January 2006, British Nuclear Fuels plc transferred its rights, liabilities and interest in the Co-operation Agreement to its subsidiary Westinghouse Electric Company LLC. On 16 October 2006 British Nuclear Fuels plc sold Westinghouse Electric Company to Toshiba.

The present investors are in the process of revising the existing Co-operation Agreement, which will govern the contributions to be provided during the financial year ending 31 March 2008. The SA Government has already committed itself to the full amount of the funding requirements for the 2008 financial year, being R2,5 billion. In 2007, the Industrial Development Corporation Board approved contributions of R337,4 million which are available for the 2008 financial year should the Co-operation Agreement be revised to their satisfaction. Westinghouse Electrical Company Board has also approved further funding of GBP 5 million in 2007 with the same condition. These contributions are, however, subject to the finalisation of the revised Co-operation Agreement. Further negotiations with other interested potential investors are ongoing and should be completed during the 2008 financial year. Management is not allowed to incur any commitments in excess of the funding secured from investors.

Accordingly the annual financial statements have been prepared on the basis of accounting policies applicable to a going concern. This basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities will occur in the ordinary course of business. The ability of the company to continue as a going concern depends on the ability of the company to secure sufficient funding for its commitments and the continued support of its funding contributors. The directors will not allow any commitment to be incurred without sufficient funding having been secured.

The annual financial statements were approved by the board of directors on 24 May 2007 and were signed on their
behalf by:

Dr A Ruiters	Mr J Kriek	Ms L Milne
Chairman	Chief Executive	Chief Financial Officer