Report on the annual financial statements

We have audited the group and company annual financial statements of Eskom Holdings Limited (Eskom) which comprise the directors’ report, the consolidated and separate statements of financial position at 31 March 2011, the consolidated and separate income statements and statements of comprehensive income, statement of changes in equity and cash flows for the year then ended, and the notes to the financial statements which contain a summary of significant accounting policies and other explanatory notes as set out from here.

Directors’ responsibility for the annual financial statements
The board of directors, which constitute the accounting authority, are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the requirements of the Public Finance Management Act of South Africa and in the manner required by the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility for the annual financial statements
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial statements present fairly, in all material respects, the consolidated and separate financial position of Eskom Holdings at 31 March 2011 and its consolidated and separate financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards, the requirements of the Public Finance Management Act of South Africa, 1 of 1999 and in the manner required by the Companies Act of South Africa, 61 of 1973.

Report on other legal and regulatory requirements

In terms of the Public Audit Act of South Africa and General Notice 1111 of 2010, issued in Government Gazette No 33872 of 15 December 2010, we report on the following:

Predetermined objectives
We are required by the Auditor-General to undertake a limited assurance engagement on the performance against the shareholder compact as set out on here in the Integrated Report, in the leadership overview section, in which the actual performance of the group for the year ended 31 March 2011 is compared with target key performance indicators (predetermined objectives) and report thereon to those charged with governance. In this report we are required to report our findings from our engagement relating to non-compliance with regulatory requirements, where the reported information was inadequately presented or not received timeously, and where we have evaluated reported information to be useful or reliable. We report that there are no material findings on the performance against the shareholder compact.

Compliance with laws and regulations
We are required to report on compliance with laws and regulations in accordance with the guidance contained in the applicable R3: Reporting Guide of the Auditor-General. We report that there were no material findings on non-compliance with laws and regulations on the basis set out in the guide. Refer to the directors’ report for further information.

Internal control
We considered internal control relevant to our audit of the financial statements, and the reports on predetermined objectives and compliance with laws and regulations, but not for the purpose of expressing an opinion on the effectiveness of internal control. We report that there were no material deficiencies identified during our audit that resulted in a modification of the auditors’ opinion on the financial statements and/or material findings on predetermined objectives and/or compliance with laws and regulations.

Other matters
Investigations in progress and completed
During the financial year under review the group initiated investigations into alleged irregularities and fraud within the procurement and asset management environments. No material findings were identified relating to those investigations completed during the year. At the reporting date, investigations are still ongoing.

KPMG Inc	SizweNtsaluba vsp
Per AH Jaffer	Per SY Lockhat
Chartered Accountant (SA)	Chartered Accountant (SA)
Registered auditor	Registered auditor
Director	Director
31 May 2011	31 May 2011
85 Empire Road	20A Morris Street East
Parktown 2193	Woodmead 2191