Eskom group annual results for the year ended 31 March 2020 30 October 2020 The results presentation is available at www.eskom.co.za/IR2020 Disclaimer This presentation does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy or subscribe for or underwrite or otherwise acquire, securities of Eskom Holdings SOC Ltd (Eskom), any holding company or any of its subsidiaries in any jurisdiction or any other person, nor an inducement to enter into any investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation does not constitute a recommendation regarding any securities of Eskom or any other person. Certain statements in this presentation regarding Eskom’s business operations may constitute “forward looking statements”. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the financial position, business strategy, management plans and objectives for future operations of Eskom are forward looking statements. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute Eskom’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal levels of operating performance and electricity demand in the Customer Services, Distribution and Transmission divisions and operational performance in the Generation and Primary Energy divisions consistent with historical levels, and incremental capacity additions through the Group Capital division at investment levels and rates of return consistent with prior experience, as well as achievements of planned productivity improvements throughout the business activities. Actual results could differ materially from those projected in any forward-looking statements due to risks, uncertainties and other factors. Eskom neither intends to nor assumes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In preparation of this document certain publicly available data was used. While the sources used are generally regarded as reliable the content has not been verified. Eskom does not accept any responsibility for using any such information. 1 Contents High-level overview Operational performance and outlook Financial performance and outlook Conclusion 2 High-level overview Disappointing financial results for the year ended 31 March 2020 • Revenue of R200 billion, but sales 1.29% lower than 2019, with growth hampered by capacity shortages and adverse economic conditions • Cost savings of R16.3 billion achieved against a target of R6.2 billion, but largely absorbed by cost overruns on diesel to minimise loadshedding • Improvement in EBITDA to R37 billion arising from growth in revenue • Operating profit (EBIT) of R9.2 billion in a challenging environment • Unsustainable debt burden leads to net finance cost of R31.3 billion, resulting in a net loss R20.5 billion • Net cash from operations improved overall, but liquidity remains constrained • Favourable court judgments received on a number of NERSA revenue review applications • Government support of R49 billion received in 2020 to support Eskom’s status as a going concern, with R56 billion committed for 2021. Funds are reserved for debt servicing • Secured gross funding of R50.9 billion for 2020, exceeding our target 4 Some progress made, off a low base • In November 2018, significant coal stock shortages at a number of stations • Normalised coal stock up to 50 days by 31 March 2020 • Total coal burn cost for the 2021 financial year projected to increase by only 0.3% year-on-year • Total of R7.5 billion spent on diesel-generated power to avoid or minimise loadshedding during 2020. Eskom OCGT costs for the 2021 financial year projected to reduce by 30% • Reliability maintenance programme launched at end of 2020, planned maintenance in October 2020 >14% • Kusile Unit 2 achieved commercial operation on 29 October 2020 • Medupi design modifications successfully implemented on four units by October 2020 • Divisionalisation as a first step towards restructuring, separate Transmission subsidiary by December 2021 • More assertive approach to debt collection and distribution energy loss prevention is delivering results  Municipal payment levels being maintained, despite challenging economic conditions  Top 20 defaulting municipalities’ payment rate up from 42% at March 2020 to 49% at September 2020  Soweto payment improved from 12.5% at March 2019 to 21% at March 2020 5 COVID-19 will have a substantial impact going forward • Eskom’s Pandemic Disaster Response Plan invoked in February 2020 to contain spread of the virus, maintain the supply of electricity as an essential service, and maintain the safety of people  Decline of 10.3% in sales volumes year-to-date, compared to a decline of 16.5% in the first quarter. Overall, sales volumes for 2021 are expected to be around 7% lower than 2020  Average demand was down 5 680MW during lockdown level 5, by 3 300MW during level 4, by 1 360MW during level 3, by 365MW during level 2, and 491MW in level 1. Demand largely recovered to previous levels  Planned and opportunity maintenance was undertaken during initial lockdown due to lower demand  Loadshedding implemented on 19 days (July to Sept) due to high levels of breakdowns and high demand  Delays in executing capital projects due to lockdown restrictions relating to movement of people  Tragically, 27 employees and three contractors have succumbed to the disease at 28 October 2020 • Revised Eskom’s Corporate Plan for the impact of COVID-19 and other changes in the operating environment • COVID-19 is a significant risk the factor affecting the global and local economy, as well as our business, now and into the foreseeable future 6 Operational performance and outlook Some significant challenges in the 2020 financial year • Generation energy availability factor (EAF) at 66.64%, together with unplanned maintenance at levels exceeding 20%, contributing to 46 days of loadshedding during the 2020 financial year • Stage 6 loadshedding on 9 December 2019 was a nadir for Eskom and South Africa • Severe transmission plant failures negatively affected system reliability and system minutes <1 performance • Environmental performance remained poor, particularly at Kendal Power Station • Slow progress on implementing supply chain recovery with inefficiencies in the procurement process hampering operations and delivery on maintenance programme • Municipal arrear debt escalated by 41% to R28 billion • Community resistance, vandalism of equipment and threats to employees hamper efforts to curb electricity theft and non-payment • Five critical risks materialised during March 2020, three being disaster risks 8 Generating plant and transmission network performance declined, distribution remained stable Coal plant availability and utilisation % EAF EUF • Generation EAF declined to 66.64% (2019: 69.95%), 93 93 93 90 mainly due to worsening coal plant performance 83 81 75 75 • Unplanned capability losses of 22.86% (2019: 18.31%), 70 68 67 with average partial load losses of 4 651MW 61 • Coal energy utilisation factor (EUF) increased to 93% (2019: 90%). Median age of plant of 39 years 2015 2016 2017 2018 2019 2020 Network performance • Distribution network delivered stable performance, System minutes lost for events <1 minute SAIFI 1 SAIDI 2 although Transmission performance deteriorated Events/hours Minutes 40 4.5 • Ageing network assets pose a risk 35 4.0 30 3.5 • Medupi Units 3 and 2 achieved commercial operation, 25 3.0 adding capacity of 1 588MW 20 2.5 15 2.0 • 250MVA transformer capacity installed, 127.9km of 10 1.5 high-voltage transmission lines commissioned 2015 2016 2017 2018 2019 2020 1. System average interruption frequency index 2. System average interruption duration index 9 Progress on new build defect correction plan • From May 2020, design modifications implemented on Medupi Units 3, 6, 1 and 4, with the remainder to be completed by March 2021 • Medupi Unit 3 has achieved five consecutive months of improved performance since implementing design modifications • Availability and reliability of the synchronised units at Medupi and Kusile are steadily improving • Units in commercial operation: Medupi Units 6, 5, 4, 3 and 2 (3 970MW), and Kusile Units 1 and 2 (1 600MW) • Medupi Unit 1 on track for commercial operation by July 2021 • Kusile Unit 3 on track for commercial operation by March 2021 • Currently, six units at Medupi and three at Kusile are contributing energy to the National Grid 10 Environmental performance declines, with stable socio-economic and safety performance • Poor particulate emission performance Environmental performance kg/MWh l/kWh Relative particulate emissions Water consumption continues, with increased water consumption sent out sent out 0,48 1,45 • 163 613 new households connected 0,46 0,44 1,40 (2019: 191 585) 0,42 0,40 1,35 0,38 • Lost-time injury rate of 0.30 (2019: 0.31) 0,36 0,34 1,30 • Sadly, nine contractor fatalities during the year 0,32 0,30 1,25 (2019: four, restated) 0,28 0,00 1,20 • Zero employee fatalities (2019: three) 2015 2016 2017 2018 2019 2020 Electrification (number, 000) • B-BBEE attributable spend of R102 billion Annual Cumulative Annual Cumulative (2019: R85 billion) 220 1 500 200 • Continued improvement in racial and gender 180 1 000 equity. Disability equity did not meet target 160 • 1 479 395 beneficiaries through CSI 140 500 programmes 120 100 0 11 2015 2016 2017 2018 2019 2020 Progress is being made on the turnaround • Coal stocks • Successful legal • Equity injections • Divisionalisation • Driving high- replenished challenges on by Government implemented performance • Coal quality a tariff decisions to support debt • Divisional culture focus • Headcount servicing boards in place • Consequence • Reliability reduced by about • Working capital • Planning for management maintenance 2 000 in 2020 being freed up, functional stepped up ongoing • Coal burn cost more assertive separation by • Regular staff • New build design projected to in collecting debt Mar 2021 engagements defects being increase only • Eskom compact • Transmission addressed 0.3% in 2021 agreed at Nedlac legal separation • Kusile 2 • OCGT spend for positive by Dec 2021 commercial 2021 expected to • Green financing • Process to operation be 30% lower being explored dispose of non- achieved than 2020 • High levels of core assets (EFC • Payment levels debt requires and properties) for customers in structural commenced arrears rising solution 12 There is light at the end of the tunnel • Generation outlook is improving, due to restructured organisational structure and enhanced maintenance focus, combined with priority being given to environmental issues • End-of-life power stations (8 to 10GW) being retired, further capacity needed without delay • Eskom welcomes DMRE procurement of 11 813MW of new electricity generation infrastructure under the IRP 2019, and 2 000MW of emergency procurement • Substantial capital investment required to fund Transmission expansion and strengthening, as well as investment in cost-plus mines to sustain production • Distribution revenue collection remains a challenge, but payment levels are improving • Just Energy Transition Strategy brings equitable introduction of cleaner and greener technology • Financial position remains challenging, largely as a result of unsustainable debt burden and tariffs that are not cost-reflective 13 Financial performance and outlook Driving Eskom’s financial turnaround • In 2019, we announced that we would focus on the following financial issues to drive the turnaround:  Revenue optimisation through achieving cost-reflective tariffs and increasing sales volumes  Cost curtailment through cash savings on operational and capital costs, to improve liquidity and financial sustainability  Debt relief through Government support • Although we have made progress in the majority of these areas, municipal arrear debt escalated to R28 billion. Soweto payment levels improved from 12.5% to 20.7% • Audit opinion – 2020 consolidated annual financial statements fairly presented in terms of IFRS, except:  Qualified audit opinion relating to irregular expenditure under the PFMA  Material uncertainty regarding Eskom’s status as going concern  Key audit matter on treatment of Eskom Pension and Provident Fund (EPPF)  New reportable irregularities raised 15 Process to manage irregular, fruitless and wasteful expenses improved, more initiatives under way R billion 0.2 0.1 33.1 • Reporting directives amended to comply with 0.2 4.5 recent National Treasury instructions • Slow progress on condonations from National Treasury – until condoned, expenditure on affected contracts will remain irregular 6.4 • Loss Control Department to be established to 22.1 address PFMA violations and oversight of consequence management, including disciplinary Opening Prior year Existing IE New IE Condoned Recovered Closing actions, condonations and recovery of losses balance (clean-up) (2020) balance • Enabling agreements to address irregular New irregular expenses Number R million expenditure from existing sole source contracts Tender process and DoA 29 118 • Driving a procurement roadmap to improve Other 44 73 internal procurement processes as well as Total 73 191 contract management 16 Most financial indicators improved slightly, but remain well below acceptable levels Restated 1 Profitability R billion EBITDA, R billion EBITDA margin, % % March March 50 Net profit before tax, R billion 30 Ratio 2020 2019 40 25 Revenue, R million 199 468 179 892 30 20 EBITDA, R million 36 998 31 417 20 10 15 Operating profit (EBIT), R million 9 219 1 679 0 10 -10 Net loss after tax, R million (20 502) (20 930) 5 -20 EBITDA margin, % 18.55 17.46 -30 0 2015 2016 2017 2018 2019 2020 Cash interest cover, ratio 0.94 0.94 Cash from operations Cash from operations, R billion Debt service cover ratio Debt service cover, ratio 0.52 0.47 R billion Ratio Cash interest cover ratio 1.8 50 Gross debt/EBITDA, ratio 14.39 15.73 1.6 Debt/equity (including long-term 1.4 40 2.45 3.18 provisions), ratio 1.2 30 1.0 Gearing, % 71 76 0.8 20 0.6 Free funds from operations (FFO) 7.26 5.88 0.4 10 as a % of gross debt 0.2 0.0 0 2015 2016 2017 2018 2019 2020 17 1. Restatements are disclosed in note 50 of the annual financial statements Operating profit achieved, but eroded by excessive debt servicing costs Restated 1 Income statement March March YoY % • Revenue: 13.87% tariff increase, offset R million 2020 2019 change by capitalisation of pre-commissioning Revenue 199 468 179 892 11 revenue and declining sales due to Other income 1 238 2 150 economic downturn Primary energy (112 119) (99 488) (13) • Primary energy cost: higher coal cost Net employee benefit expenses (32 976) (33 183) coupled with higher OCGT utilisation Net impairment reversal 61 260 and IPP production Other expenses (18 674) (18 214) 3 EBITDA (before net fair value loss) • Employee benefit cost: headcount 36 998 31 417 18 reduction through attrition, offset by Depreciation and amortisation expenses (27 779) (29 738) 7 three-year wage settlement Operating profit (EBIT) 9 219 1 679 >400 agreement Net fair value loss on financial instruments and embedded derivatives (4 592) (3 409) (35) • Depreciation: units at Hendrina and Net finance cost (31 252) (27 732) (13) Komati placed in cold reserve in 2019 Share of profit of equity-accounted investees 63 35 • Finance costs: higher indebtedness, Loss before tax (26 562) (29 427) 10 coupled with more expensive Income tax credit 6 060 8 497 (29) borrowing costs Net loss for the year (20 502) (20 930) 2 1. Restatements are disclosed in note 50 of the annual financial statements 18 Electricity revenue increased by 12% (before IFRS adjustments) March March YoY % 2020 2019 change • Reduction in sales across all domestic sectors, while Revenue, R million international sales grew. Industrial sector most Local 196 868 178 906 10 affected by the economic downturn and depressed International 12 229 8 241 48 commodity prices Gross electricity • Average price increase of 13.2%, from 90.01c/kWh 209 097 187 147 12 revenue to 101.86c/kWh Net revenue not • IFRS 15 applies the cash basis for defaulting (6 107) (6 442) 5 recognised (IFRS 15) customers, negatively impacting revenue Total electricity revenue 202 990 180 705 12 Other revenue 2 161 2 580 (16) Sales and revenue Capitalised (5 683) (3 393) (68) R billion Sales, TWh Electricity revenue, R billion TWh 200 220 Total revenue 199 468 179 892 11 190 215 180 210 Sales, GWh 170 205 Local 190 446 195 858 (2.8) 160 200 International 15 189 12 461 21.9 195 150 Total sales 205 635 208 319 (1.3) 0 190 19 2015 2016 2017 2018 2019 2020 Primary energy cost increased by 13% • Eskom production volume reduced to Primary energy cost increase, R billion 214 968GWh while IPP production volume increased to 11 958GWh Actual 2019 99.5 (2019: 218 939GWh Eskom, 11 344GWh IPPs) Coal (2.8) 10.7 7.9 • Total Eskom and IPP OCGT cost of R7.5 billion, Nuclear an increase of R1 billion • Eskom production cost increased by R8.5 billion, Eskom OCGTs 0.5 or 14% Renewables 0.9 1.7 2.6 • Increase of 16.3% in the average coal purchase IPP OCGTs 0.5 cost per ton, mainly due to short-term contracts concluded to rebuild stockpiles International 1.0 • Renewable IPP cost increased by R2.6 billion Actual 2020 112.1 and IPP OCGTs by R0.5 billion Total Volume Price 20 Balance sheet strengthened through Government support Restated 1 March March YoY % Financial position, R million 2020 2019 change Property, plant and equipment and intangible assets 657 189 654 365 <1 Working capital – inventory and current receivables 57 563 49 041 17 Liquid assets – cash and cash equivalents and investments 34 971 11 594 202 Derivatives held for risk management 57 636 22 662 154 Other assets 2 15 580 18 042 (14) Total assets 822 939 755 704 9 Equity 3 185 863 149 978 24 Debt securities and borrowings 483 682 440 610 10 Working capital – current payables 54 904 50 945 8 Derivatives held for risk management 2 941 7 040 (58) Other liabilities 4 95 549 107 131 (11) Total equity and liabilities 822 939 755 704 9 1. Restatements are disclosed in note 50 of the annual financial statements 2. Mainly comprises assets held for sale and future fuel 3. Includes Government support of R49 billion received during the 2020 financial year 4. Mainly comprises non-current provisions, employee benefit obligations, contract liabilities and lease liabilities 21 Reliance on debt is unsustainable – gross finance costs are the second largest cost after primary energy Restated 1 March March YoY % • Growth in debt securities and Group debt overview, R million 2020 2019 change borrowings largely attributable to Debt securities and borrowings 483 682 440 610 10 weakening of the Rand in Net market making liabilities 62 76 March 2020, with corresponding Cash and cash equivalents 2 (22 990) (2 031) >1 000 growth in derivative assets due to Net derivatives held for risk management 2 (54 695) (15 622) >250 comprehensive hedging of market Net interest-bearing debt 406 059 423 034 (4) exposures • Debt raising of R32 billion, Group finance cost overview, R million offset by debt repayments of R31.5 billion (excluding Finance cost 42 305 39 507 7 commercial paper) Finance income (2 610) (2 722) 4 • Average cost of debt increased to Borrowings capitalised to assets (14 584) (15 378) 5 9.58% (2019: 9.33%) Other finance costs, including unwinding 6 141 6 325 (3) • Approximately 72% of debt at Net finance cost 31 252 27 732 13 fixed interest rates 1. Restatements are disclosed in note 50 of the annual financial statements 2. In the table above, assets are reflected as negative amounts 22 Secured 64% of funding for the 2021 financial year by 30 September 2020 Actual Funding Committed Guarantee utilisation allocation at 31 March 2020 funding plan and signed R billion R billion 2020 2021 2021 350 DFIs 15.5 12.4 11.7 ECAs 0.3 0.6 0.6 313 International bonds – – – Domestic bonds and notes >1 year 11.0 5.1 5.1 15 22 Domestic bonds and notes ≤1 year 7.9 2.9 1.2 Total Drawn down Committed not Available Government drawn down Structured products – 8.2 – guarantee Bank funding 1.2 1.5 1.0 Debt maturity profile at 31 March 2020 Funding 35.9 30.8 19.6 R billion Interest Capital Rollover of structured products 15.0 – – 37 Total funding 1 50.9 30.8 19.6 31 % secured 64% 29 25 23 59 Debt servicing costs (after hedging) of R96 billion in 2021, reducing to 39 32 31 36 R70 billion in 2022, and averaging around R60 billion per year to 2025 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 1. Gross of commercial paper 2. Funding sources targeted for 2021 are subject to change depending on requirements 23 Without Government support, cash from operations would have been insufficient to meet debt servicing Cash flows for the year ended 31 March 2020, R billion 199 Primary energy, controllable Cost savings alone is not the answer – R29 billion savings amounts to 22% of (80) controllable operational outflows of approximately R131 billion. A cost-reflective tariff is required to ensure long-term financial sustainability Primary energy, Debt servicing of (32) non-controllable1 R71 billion comprised: Capital of R32 billion Employee benefits Debt service gap of (33) Interest of R39 billion ±R29 billion Repairs, maintenance and operations without support (16) (2) Working capital (163) 36 (39) Cash balance improved by (3) ±R20 billion due (26) 32 (32) to Government (29) (29) support of R49 billion Revenue Operating Operating Interest Balance Capital Balance Debt raised Debt repaid Debt cashflows surplus repaid before expenditure before service gap investing and other funding 1. Non-controllable primary energy includes renewable IPP costs and environmental levies investing 24 Capital expenditure contained to manage liquidity Total Eskom funded capital expenditure • Total Eskom group funded capital of R billion 52 56 Other R23 billion (2019: R34 billion), with R10 billion Existing asset base 48 47 New asset base used to expand the asset base and R12 billion spent on existing assets 34 • Restricted organisational capital expenditure 23 requirements to improve liquidity • Continued deferral of capital maintenance, refurbishment and replacement of infrastructure may lead to operational 2015 2016 2017 2018 2019 2020 challenges R billion 2020 2019 • Medupi: R118.4 billion spent, cost to Medupi 2.9 4.9 completion of R145 billion (excludes FGD) Kusile 2.5 8.6 • Kusile: R137.4 billion spent, cost to completion Total 5.4 13.5 of R161.4 billion (includes FGD) 25 Arrear municipal debt continues to escalate, leading to additional liquidity pressure Invoiced municipal arrear debt • Invoiced municipal arrear debt (including interest) R billion Arrear municipal debt % 30 +41% 100 escalated by R8.1 billion, to R28 billion Municipal payment levels 25 95 • Payment level of 79% by municipalities (excluding 20 90 metros) on amounts billed, declining from 96% in 2016 15 28.0 85 • Payment level of 42% for top 20 defaulting municipalities 10 19.9 80 13.6 • Commenced a municipal debt management strategy to 5 9.4 75 5.0 6.0 reduce and/or eliminate overdue debt, stop defaulting 0 70 2015 2016 2017 2018 2019 2020 where it occurs, and prevent future defaulting by paying Soweto small power user (SPU) debt customers, including attachment of municipal assets R billion Debt write-off Soweto SPU payment levels % 25 21 • Collaborating with the Eskom Political Task Team to Soweto SPU arrear debt 20 address ongoing municipal debt challenges 20 19 7.9 18 • Invoiced Soweto SPU arrear debt (including interest) 15 17 decreased to R12.8 billion (2019: R18.2 billion), after 16 10 15.4 18.2 15 writing off in duplum debt components of R7.9 billion 12.8 12.8 14 5 8.6 10.5 • Debt recovered from ZESCO of Zambia and ZETDC of 13 0 12 Zimbabwe; EDM of Mozambique remains in arrears 2015 2016 2017 2018 2019 2020 26 1. Prior year Soweto SPU debt includes in duplum debt components that were not written off at the time Some progress achieved in correcting the lack of cost-reflective revenue determinations MYPD 3 RCA • Favourable court judgment received in June 2020 (2015, 2016 and 2017) • NERSA public consultation process, with final determination expected by 26 February 2021 MYPD 3 RCA (2018) • Eskom founding affidavit submitted in April 2020, NERSA has served its notice to oppose 2019 revenue decision • Favourable court judgment received in March 2020 • Eskom submitted a supplementary tariff application of R5.4 billion • NERSA public consultation process, with final determination expected by 26 February 2021 MYPD 4 revenue • Favourable court judgment received in July 2020 decision (2020 to 2022) • Court reviewed and set aside NERSA’s determination – Eskom to recover R69 billion in a phased manner over a three-year period, from the 2022 financial year • NERSA granted leave to appeal the judgment in the Supreme Court of Appeal • Eskom has applied for execution of the order while awaiting the appeal process 2019 RCA • NERSA decision of R13.3 billion in response to an application of R27.3 billion • Reasons for decision published in October 2020 • NERSA decision on timing of recovery expected by 26 November 2020 Eskom will submit an RCA application of about R10 billion for the 2020 financial year 27 Financial results for 2021 expected to be worse, before long-term improvements materialise Actual Budget Budget March March March Financial outlook 2020 2021 2023 Revenue, R million 199 468 201 536 268 708 EBITDA, R million 36 998 23 522 73 380 Government support Operating profit (EBIT), R million 9 219 (5 322) 40 933 of R56 billion required Net (loss)/profit after tax, R million (20 502) (26 205) 2 514 to meet debt servicing EBITDA margin, % 18.55 11.67 27.31 requirements for 2021 Cash interest cover, ratio 0.94 0.31 2.54 Debt service cover, ratio 0.52 0.11 1.11 • Results for 2021 expected to be worse than 2020, primarily due to the anticipated impact of COVID-19 on operations, particularly on sales • Cash from operations remain insufficient to service debt without Government support • Government support of R56 billion committed for 2021 to manage liquidity • Most ratios maintain negative trend into 2021, however, return to profitability from 2023 • Corporate Plan assumes a cost-reflective tariff path 28 Conclusion In conclusion • On average, Eskom requires Government support of about R1 billion per week in 2021. We regret the burden that this places on the fiscus, particularly in the current economic climate • Financial modelling shows that with a significantly reduced debt balance of R200 billion, a cash balance of R30 billion and an EBITDA margin of at least 35%, Eskom would be in a position to achieve independent financial sustainability • An improvement in operational performance will positively affect financial results • Cumulative cost savings of R62 billion targeted by 2023 alone is not sufficient to improve Eskom’s financial position • Government equity support is improving liquidity by assisting with debt servicing, but will not resolve Eskom’s financial viability and is an unsustainable solution • The migration towards a cost-reflective tariff is necessary to cover our cost of capital and, combined with cost efficiencies and reducing debt levels, will restore financial sustainability 30 Eskom group annual results for the year ended 31 March 2019 The results presentation is available at www.eskom.co.za/IR2020