Directors' responsibilties and approval

The directors of Pebble Bed Modular Reactor (Pty) Limited have pleasure in presenting the annual financial statements for the year ended 31 March 2008.

In terms of the Companies Act of South Africa, 1973, and the Public Finance Management Act, 1999 (PFMA), as amended, the directors are required to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the Company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Reporting Standards and its interpretations adopted by the International Accounting Standards Board. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements comprise the:

• balance sheet;
  
• income statement;
  
• statement of changes in equity;
  
• cash flow statement;
  
• accounting policies; and
  
• notes to the financial statements.

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 2008 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 Chairperson, concur with this statement.

In addition, the directors have also reviewed the cash flow forecast for the year ending 31 March 2009. To date, the Company has been funded by contributions made by investors (Eskom Holdings Limited, the 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.

The present investors are in the process of revising the existing Shareholders Subscription Agreement, which will govern the funding to be provided during the financial year ending 31 March 2009. The funding requirements for the 2009 financial year, being R2,5 billion, will be funded through the South African government’s R1,7 billion, the Industrial Development Corporation Board approved contributions of R482 million, which will be made available for the 2009 financial year should the Shareholders Subscription Agreement be revised to their satisfaction.

The Westinghouse Electrical Company Board has also approved further funding of $25 million in 2009 with the same condition. These contributions are, however, subject to the finalisation of the Shareholders Subscription Agreement. Further negotiations with other interested potential investors are ongoing and should be completed during the 2009 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 set out within this website, which have been prepared on the going-concern basis, were approved by the Board of Directors on 29 May 2008 and were signed on its behalf by: