Report of the independent auditors
To the members of South African Airways (Proprietary) Limited
We have audited the group and company annual financial statements of South
African Airways (Proprietary) Limited which comprise the directors' report, the
balance sheet and consolidated balance sheet at 31 March 2007, and the income
statement and consolidated income statement, statement of recognised income and
expenses and consolidated statement of recognised income and expenses and cash
flow statement and consolidated cash flow statement for the year then ended,
and a summary of significant accounting policies and other explanatory notes as
set out on pages 19 to 81 .
Management's responsibility for the financial statements
Management is responsible for the preparation and fair presentation of
these financial statements in accordance with International Financial Reporting
Standards and the performance information in accordance with section 55(2)(a)
of the Public Finance Management Act 1 of 1999 and the Companies Act of South
Africa respectively. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation
of financial statements that are free from material misstatement, whether due
to fraud or error; selecting and applying appropriate accounting policies; and
making accounting estimates that are reasonable in the circumstances.
Auditors' responsibility
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. The audit
was also planned and performed to obtain reasonable assurance that our duties
in terms of section 27 and 28 of the Public Audit Act, 25 of 2004, have been
complied with. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The procedures
selected depend on the auditors' 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 control 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 control. 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 financial position of South African Airways (Proprietary) Limited
and the group as at 31 March 2007, and of their financial performance and their
cash flows for the year then ended in accordance with International Financial
Reporting Standards, the Companies Act of South Africa and the Public Finance
Management Act 1 of 1999, as amended, and the Public Audit Act, 25 of 2004.
Emphases of matter
Without qualifying our opinion above, we draw attention to the matters
listed below.
Going concern
The directors have disclosed details of the group's intended restructuring
programme on pages 20 and 26 of their report. The long-term sustainability of
the airline is dependent on the successful implementation and approval of the
restructuring plan.
Public Finance Management Act 1 of 1999 (PFMA) and Public Audit Act, 25 of
2004 (PAA)
We draw your attention to the disclosure of the group's PFMA non-compliance
made on pages 24 and 25 of the directors' report.
Compliance with legislation relating to financial matters
South African Airways (Proprietary) Limited and the group have put processes
and systems in place to identify all legislation applicable to it as well as a
monitoring plan to ensure compliance with this legislation. As disclosed in the
directors' report on page 25, as these systems are not yet fully implemented,
the group cannot conclude that it has complied with all applicable legislation
relating to financial matters, financial management and other related matters.
Deloitte & Touche
Andrew Mackie
Partner
APF Inc
Mahen Naidoo Partner
4 June 2007