Basis of preparation
The financial statements of Eskom and its subsidiaries are prepared in accordance with the Companies Act, 61 of 1973 and comply with
International Financial Reporting Standards (IFRS). The accounting policies were consistently applied to all years presented.
Restatement of comparatives
The effect of the implementation of IFRS 7 and the restatement of the value added taxation portion that was incorrectly included in the
tariff to determine the host contract at inception when valuing embedded derivatives are detailed in the restatement note.
Unusual changes impacting the balance sheet, net income and cash flows
The net impact on the profit or loss of changes in the fair value of the embedded derivatives for the group is a fair value loss of
R143 million (2007: fair value gain R4 305 million) and a fair value loss of R149 million (2007: fair value gain R4 131 million) for the company.
At 31 March 2008, the embedded derivative assets amounted to R12 713 million (2007: R8 686 million) for group and R12 707 million
(2007: R8 685 million) for the company. The embedded derivative liabilities at 31 March 2008 were R5 084 million (2007: R914 million)
for the group and R5 084 million (2007: R913 million) for the company.
Change in estimates
During the accounting period, management reassessed its estimates in respect of the useful life of certain generating plant from
35 to 50 years. Included in the profit or loss for the period is a decrease in depreciation of R484 million to reflect the change in estimated
useful life.
Changes in the composition of Eskom Holdings Limited and the Eskom Group
Mountain Communications (Pty) Limited, a subsidiary of Eskom Enterprises (Pty) Limited, and the assets to be sold to
Broadband Infraco (Pty) Limited were disposed of during the year.
Issued share capital
There was no change in the issued share capital during the year.
Material events after the reporting date
On 18 June 2008 Nersa announced an additional increase in the electricity tariff of 13,3% for the year ending 31 March 2009 which
resulted in a 27,5% average increase year-on-year. Nersa also ruled that the price increase to “poor” residential customers be limited to
14,2%. The fair value of embedded derivatives at 31 March 2008 was calculated based on the Nersa announcement of 18 June 2008 as
well as the principles established in the previous determination of 20 December 2007.
Material changes in contingent liabilities and capital commitments
The capital commitments are disclosed heres. There was no material change in contingent liabilities.
Impairment of assets
The net amount of impairment for all group assets was R446 million (2007: net reversal of R196 million).
Declaration of dividend
No dividend was proposed to the shareholder having taken into account the resource impact of the future build programme for the
current as well as the previous year.
Auditors’ report
The auditors KPMG Inc and Sizwe Ntsaluba VSP have issued their opinion on the group annual financial statements for the year ended
31 March 2008. A copy of the auditors’ unqualified report is available for inspection at the company’s registered address.
Restatement of comparatives
Eskom has implemented the following new and revised statements and interpretations:
- IFRS 7, Financial Instruments: Disclosures
- Complementary amendment to IAS 1, Presentation of financial statements – capital disclosures
The implementation of IFRS 7 did not result in a change in accounting policy as the statement affected the disclosure of financial
instruments.
The following new and revised statements and interpretations were implemented during the financial year, but had no impact on the
financial statements.
- IFRIC 8, Scope of IFRS 2
- IFRIC 9, Reassessment of embedded derivatives
- IFRIC 10, Interim financial reporting and impairment
- IFRIC 11, Group and treasury share transactions
Correction to embedded derivatives
In assessing the inputs used in the valuation of embedded derivatives, it was discovered that a value added taxation portion was incorrectly
included in the tariff used to determine the host contract at inception. The annual financial statements for the comparative period have
been restated to correct this error.
The effect of the restatement to correct embedded derivatives and the reallocations as a result of the implemetation of the new and
revised statements and interpretations on the comparative financial statements are indicated below. |
