ANNUAL FINANCIAL STATEMENTS 2025 ii Contents Directors' report 2 18 Finance lease receivables 100 Nature of the business 2 19 Payments made in advance 100 Overview of the year 2 20 Trade and other receivables 101 Operational performance 3 21 Investments 102 Financial performance 5 22 Cash and cash equivalents 102 Legal separation 8 23 Assets and liabilities held-for-sale 102 Governance and compliance 9 24 Share capital 103 Human resources 13 25 Debt securities and borrowings 104 Shareholder compact performance 14 26 Payments received in advance and contract liabilities and 106 deferred income Reportable irregularities 17 27 Employee benefit obligations 108 Events after the reporting date 17 28 Provisions 111 Approval 17 29 Lease liabilities 113 Report of the audit committee 18 30 Trade and other payables 113 Statement by company secretary 23 31 Loan from shareholder 113 Independent auditor’s report to Parliament and the shareholder 24 on Eskom Holdings SOC Ltd and its subsidiaries 32 Revenue 114 Statements of financial position 38 33 Other income 114 Income statements 39 34 Primary energy 114 Statements of comprehensive income 39 35 Employee benefit expense 115 Statements of changes in equity 40 36 Net impairment and write down of assets 115 Statements of cash flows 41 37 Other expenses 115 Notes to the financial statements: 42 38 Depreciation and amortisation expense 115 1 General information 42 39 Net fair value and foreign exchange (loss)/gain 116 2 Summary of material accounting policies 42 40 Finance income 116 3 Capital management, going concern and impairment 53 41 Finance cost 116 4 Critical accounting estimates and assumptions 58 42 Income tax 117 5 Financial risk management 62 43 Cash generated from operations 118 6 Accounting classification and fair value 80 44 Net debt reconciliation 119 7 Segment information 85 45 Financial guarantees, contingent liabilities and assets 119 8 Property, plant and equipment 88 46 Commitments 120 9 Intangible assets 91 47 Related-party transactions and balances 121 10 Future fuel supplies 91 48 Events after the reporting date 123 11 Investment in equity-accounted investees 91 49 Remuneration of directors and executives 124 12 Investment in subsidiaries 92 50 New standards and interpretations 127 13 Inventories 92 51 Information required by the Public Finance Management Act 129 14 Deferred tax 93 52 Reportable irregularities and matters under investigation 133 15 Loans receivable 94 Appendix – Abbreviations, acronyms and definitions 137 16 Embedded derivatives 94 Contact details 140 17 Derivatives held for risk management 95 The annual financial statements were prepared under the supervision of the chief financial officer, C Cassim CA(SA). The financial statements have been audited in compliance with section 30 of the Companies Act of South Africa, 71 of 2008 (Companies Act), and approved by the board of directors (board) on 29 September 2025. The audited financial statements of the group and company as at and for the year ended 31 March 2025 are available for inspection at the company’s registered office and were published on 30 September 2025. The full suite of the group's externally published reports, including the financial statements and integrated report, are available at www.eskom.co.za. ABC 1 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report for the year ended 31 March 2025 The directors are pleased to present their report for the year ended 31 March 2025. Nature of the business Eskom Holdings SOC Ltd (Eskom) and its subsidiaries (together the group) is South Africa’s primary electricity supplier through the vertically integrated regulated electricity business (Eskom and National Transmission Company South Africa SOC Ltd (NTCSA)) that generates, transmits and distributes electricity to local industrial, mining, commercial, agricultural, redistributor (metropolitan and other municipalities) and residential customers and to international customers in southern Africa. The group also purchases electricity from independent power producers (IPPs) and international suppliers in southern Africa. Eskom is a state-owned company, with the Minister of Electricity and Energy as the shareholder representative. The state is the only shareholder in Eskom. The group’s head office is in Johannesburg. The nature of the business of the significant operating subsidiaries is set out in note 12 in the annual financial statements. The primary business focus of the other subsidiaries is to support the electricity business. Overview of the year The information in this report covers the group performance of Eskom and its major operating subsidiaries, unless otherwise stated. A high-level summary of the pertinent issues that characterised the year under review, as well as any material developments after year end is presented in this report. Additional information, where relevant, is contained in applicable sections of this report as well as the annual financial statements and integrated report. The group achieved earnings before interest, tax, depreciation and amortisation (EBITDA) of R99.0 billion (2024: R43.4 billion) and a profit before tax of R23.9 billion (2024: R25.5 billion loss before tax) for the year. This is the first profit recorded by the group since 2017 and a significant improvement when compared to the prior year. The improvement was mainly due to the tariff increase of 12.7% effective 1 April 2024, a 3.5% increase in sales volumes to 189.7TWh (2024: 183.3TWh) and a reduction in primary energy costs due to significantly lower open cycle gas turbine (OCGT) expenditure, improved coal- fired plant performance, lower diesel prices and refunds due to resolving of the fuel levy dispute with the South African Revenue Services (SARS). Plant performance in the generation division (generation) improved considerably with limited loadshedding during the year. Plant availability improved with the energy availability factor (EAF) at 60.6% (2024: 54.6%), unplanned breakdowns and losses (unplanned capability loss factor (UCLF)) at 26.1% (2024: 32.3%) and planned maintenance (planned capability loss factor (PCLF)) at 12.8% (2024: 12.0%). Eskom achieved 310 continuous days without loadshedding from 26 March 2024 to 30 January 2025 with loadshedding required on 13 days (2024: 329 days) during the remainder of the year. The Eskom Debt Relief Amendment Act, 5 of 2025, reduced the initial total debt relief arrangement from government of R254 billion to R230 billion because of the improved performance of Eskom as well as the delay in the sale of the Eskom Finance Company SOC Ltd (EFC) (the sale to African Bank Limited consists of the EFC loan book and interest in Nqaba referred to as the EFC disposal group). Eskom received R64 billion of debt relief support from government during the year, of which R8 billion was approved on 21 October 2024 and the remaining R56 billion on 11 June 2025 for conversion to equity. The sale of the EFC disposal group to African Bank Limited was approved by the Eskom board (board) after receiving approval in terms of sections 54 and 66 of the Public Finance Management Act, 1 of 1999 (PFMA) received from the Department of Electricity and Energy and National Treasury. The sale agreement has been signed by all parties and the process to obtain regulatory approval from the Competition Commission and Prudential Authority is underway. It is expected that the sale will be concluded by 31 March 2026 and it has been classified as held-for-sale. Refer to note 23. Liquidity in the long term after the debt relief period continues to remain at risk due to financial sustainability challenges arising from an inadequate tariff path, high debt service costs, above-inflationary cost increases, escalating municipal arrear debt, operational inefficiencies, the impact of crime, fraud and corruption (including loss of revenue because of illegal electricity connections and illicit prepaid electricity tokens) and continued focus on addressing plant performance and funding required to expand the transmission infrastructure for new generation sources. The focus on cost savings remains a key focus area to improve liquidity and ultimately financial sustainability by limiting cost growth, reducing costs and identifying income opportunities where possible. Savings of R16.3 billion (2024: R9.9 billion) were recorded for the year. The resolution of the dispute with SARS regarding the previously disallowed claims for fuel levy rebates had a significantly favourable impact on the financial results. Recovery of R9.2 billion from SARS to Eskom, the reversal of a R2.8 billion provision relating to previous fuel levy rebates that no longer need to be repaid to SARS and reinstatement of a process for Eskom to claim for ongoing fuel levies incurred (R2.2 billion for the year) contributed a total of R14.2 billion to the EBITDA. Non-payment of municipal debt remains a systemic challenge for the entire electricity industry and other industries in the country. Municipal arrear debt has escalated significantly by 27% to R94.6 billion (2024: R74.4 billion). More than 85% of the 71 municipalities approved to participate in the municipal debt relief programme are failing to fully settle their current accounts on time. Replacing or upgrading of unsupported or outdated operating systems to reduce the exposure to cyber attacks remains a priority for the group. Significant progress has been made in enhancing Eskom’s risk-based cyber security strategy. The information security programme has been strengthened with multiple layers of defence for better protection, particularly for Eskom’s online vending system which will assist with the reduction of potential financial losses. The long-term sustainability of Eskom, including the ability to compete, collaborate and lead as a central player in a restructured electricity industry, is a key focus area and led to the refocusing of Eskom’s strategy to evolve from a traditional utility to a resilient, future-ready utility that can confront challenges and unlock new opportunities. The review of the strategy ensures continued focus on the material shifts in the electricity supply industry including regulatory reform, decarbonisation imperatives and the evolving role of state-owned utilities. The board considered that there are uncertainties and dependencies relating to the going-concern assessment of the group and company that exist both from a timing of intervention perspective as well as whether the plans will materialise as anticipated. The events, conditions and assumptions described in note 3.2 inherently include material uncertainties that may cast significant doubt on the going concern of the group and company. The board has a reasonable expectation that the risks relating to the going concern will be satisfactorily addressed with the mitigation strategies in place. The board continues to manage these strategies as a priority as it is important that they materialise as envisaged. The board assessed the current cash flow projections considering that future capital costs during the debt relief period will be funded from cash from operations. The board concluded after carefully considering the progress of the initiatives included in note 3.2 and the continued financial support from the government through the debt relief arrangement, that there is a reasonable expectation that the group and company have access to adequate resources and facilities to be able to continue its operations and fund the capital programme for the foreseeable future as a going concern. The consolidated and separate financial statements have therefore been prepared on a going-concern basis. ABC 2 Operational performance The performance in the generation division improved with the ongoing implementation of the Generation Recovery Plan. Extensive planned maintenance has been conducted in line with the plan to address plant performance challenges. Unplanned maintenance was required to address issues experienced with several critical plant components during the year, mainly at Matla, Kendal, Tutuka, Duvha, Majuba, Medupi and Kusile power stations, as well as boiler defect corrections at the Medupi and Kusile power stations. Eskom and IPP-owned OCGTs were used during the year to support the power system and prevent or mitigate loadshedding. The average Eskom OCGT load factor for the year decreased to 10.3% (2024: 17.0%) against a target of 9.0%. Loadshedding and load curtailment were implemented for 175 hours (2024: 6 367 hours), reducing supply by an estimated 354GWh (2024: 13 215GWh) which is a significant improvement compared to the prior year. Technical performance Generation performance Generating plant availability improved to 60.6% (2024: 54.6%) because of a significant decrease in UCLF to 26.1% (2024: 32.3%). The implementation of the Generation Recovery Plan resulted in the recovery of generating capacity, improved risk management, increased focus on ancillary plant performance, spares availability, improved quality outage execution and skills as well as involvement of the original equipment manufacturers. The EAF target of 65% for the year was not met despite the improvements. Eskom remains committed to consistently reduce the need for loadshedding by improving its generation reliability. Midlife refurbishment projects to improve the EAF to 70% by 2028 and sustain the performance to 2030 will be a priority. The energy utilisation factor (EUF) for the entire generation fleet decreased to 77.8% (2024: 81.8%) at year end. Coal-fired power stations were operated at an average EUF of 91.9% (2024: 96.5%) with all coal-fired power stations recording EUF levels above 85%. EUF levels of coal-fired power stations remain above the international norm of around 75%. The high EUF can be alleviated by adding additional dispatchable capacity to the fleet and improving generation plant reliability. Negative technical consequences on the EUF remain a risk over the long term due to the age of the fleet. The graph below reflects the inter-relationship of unplanned, planned and other capability loss factors with the EAF and coal EUF. % % 50 100 40 80 30 60 20 40 10 20 Coal energy utilisation factor (%) – right axis Energy availability factor (%) – right axis Other capability loss factor (%) – left axis Planned capability loss factor (%) – left axis 0 0 Unplanned capability loss factor (%) – left axis 2021 2022 2023 2024 2025 Unit 1 of Koeberg power station was taken offline for a planned refuelling outage on 17 February 2025 and is expected to return to service during October 2025. Unit 2 of Koeberg power station was successfully synchronised to the grid at the end of December 2024. The unit was subsequently taken off for repairs and has been operating at full load after synchronisation to the grid on 11 March 2025. The National Nuclear Regulator announced its decision on 15 July 2024 to grant Eskom a licence to continue operating Koeberg unit 1 for another 20 years to 21 July 2044 and deferred the decision on Koeberg unit 2. The decision for unit 2 is expected to be announced prior to the current licence expiry date of 9 November 2025. Plans are in place to recover declining coal inventory levels as five (2024: zero) coal-fired power stations had coal inventory below their individual minimum inventory holding levels at 31 March 2025. Normalised coal inventory of 40 days (2024: 45 days) (excluding coal inventory at Medupi power station) declined slightly compared to the prior year. Unfavourable weather conditions (extended periods of high rainfall) and rail infrastructure issues contributed to the decline. Eskom continues to work with mines on initiatives to improve coal quality with specific initiatives focused on the supply to Matla power station where most of the coal quality-related load losses occurred. The coal quality from short- and medium-term suppliers across the system improved due to initiatives such as verification. Network performance The transmission system reliability deteriorated compared to the prior year with an increase in system minutes lost for events <1 minute to 4.4 minutes (2024: 3.3 minutes) due to several equipment failures, commissioning errors and veld fire-related incidents resulting in trips and transmission line faults. There were four (2024: one) major interruption incidents ≥1 minute recorded during the year. NTCSA continues to focus on increasing grid capacity and ensuring grid stability to support an increase in generation capacity. A key focus area is the updated Transmission Development Plan 2024 which was published in October 2024. The plan sets out the capital investment strategy to facilitate the grid connection of additional generation capacity and highlights the need to construct 14 500km new transmission lines by 2034 thereby enabling the integration of 37GW of new generation capacity. Network performance at the distribution division (distribution) continued to remain stable with system average interruption duration index of 34.9 (2024: 34.9). The distribution energy losses increased to 10.4% (2024: 9.9%), totalling 20 525GWh (2024: 19 166GWh) with an increase in the estimated non-technical losses to 14 881GWh (2024: 13 924GWh) for the year. Refer to note 51.3. Distribution continues to execute various initiatives to reduce both technical and non-technical energy losses. Theft, vandalism and overloading of both networks and transformers continue to contribute to increased system interruptions that impact resource availability. Initiatives such as investments in modernising the distribution network through the rollout of smart meters and establishing advanced metering infrastructure aim to address inefficiencies in key areas such as energy losses, amongst others. ABC 3 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Operational performance (continued) Technical performance (continued) Network performance (continued) The Key Revision Number (KRN) rollover project resulted in 7.2 million meters being recoded and assisted in uncovering approximately 2.2 million zero buyers. The number of zero buyers was reduced by almost 900 000 by year end through the zero buyers reduction programme. A total of 800 000 smart meters were installed during the year as part of the digitalisation and metering infrastructure refurbishment programme. These programmes are expected to have a positive impact on the implementation of load limiting, prevention of meter tampering and facilitation of debt management through remote disconnections. Environmental performance Relative particulate emissions performance did not meet the target of 0.3kg/MWh sent out despite the improvement to 0.6kg/MWh sent out (2024: 0.8kg/MWh sent out). The target at several power stations was frequently exceeded for particulate matter emission limits and the target was only met for six out of 14 coal-fired power stations by year end. The level of emissions continues to be affected by ash and dust handling plant issues as well as poor performance of electrostatic precipitators and sulphur trioxide plant. Key actions to improve emission performance at stations were identified including optimisation of completed emission upgrades, recovery of the dust handling plant and management of the complete ashing cycle with key aspects being tracked in the Generation Recovery Plan. Improved performance compared to the prior year were noted at Kriel, Matla, Camden, Duvha, Arnot, Tutuka, Kusile and Kendal power stations with the most significant improvement at Kriel due to achievement of regular compliance. The Minister of the Department of Forestry, Fisheries and the Environment (DFFE) issued a favourable Minimum Emission Standards exemption decision for eight power stations on 31 March 2025. The decision grants exemption until 31 March 2030 for Lethabo, Tutuka, Kendal, Majuba, Medupi and Matimba power stations, thereby allowing these power stations to continue to operate within strict conditions, after which further exemptions or retrofits will be required. Exemptions were received for Duvha and Matla power stations until their planned decommissioning in 2034. The Minimum Emission Standards exemption decision did not stipulate the requirement for additional emission reduction projects beyond existing commitments for Eskom, although the decision does place multiple additional requirements on Eskom, ranging from additional ambient air quality monitoring to additional health support to communities. Work has been initiated to meet these requirements. Decommissioning, repowering and repurposing plans for Camden, Grootvlei, Hendrina, Arnot and Kriel power stations were submitted to the Minister of DFFE in May 2025 as required. The submissions are in the process of being reviewed by an expert panel appointed by the DFFE in July 2025. The criminal matter regarding the non-compliance with the atmospheric emission licence for Kendal power station instituted against Eskom and its board in 2019 was dismissed on 6 January 2025 as the state failed to provide sufficient evidence that the power station operated above its licenced stack emission limits during deemed normal operating conditions. The focus at Kendal power station remains on continued implementation of the emission recovery plan as required by the atmospheric emission licence compliance directive received in 2019. The target for specific water usage was not met with 1.40ℓ/kWh sent out (2024: 1.43ℓ/kWh sent out) against the target of 1.37ℓ/kWh sent out for the year. The marginal improvement compared to the prior year is due to reduced water consumption at Majuba, Hendrina, Matimba, Camden, Grootvlei and Koeberg power stations mainly because of focused monitoring of the effective implementation of water management action plans. Water management is a focus area as Eskom has a responsibility to reduce water usage in a water scarce country. Safety The group is committed to the health and safety of its employees, contractors and members of the public. Steps are being taken to ensure that risks and opportunities are managed and that the value principle of Zero Harm is entrenched throughout the organisation. The lost-time injury rate target of 0.30 for the year was achieved with a rate of 0.23 (2024: 0.29). There was one (2024: two) employee fatality, two (2024: three) contractor fatalities and 15 (2024: 20) recordable public fatality incidents. Supplier coal haulage incidents by road resulted in a further 11 (2024: 12) public fatalities during the year. Capacity expansion programme Significant construction work was completed from inception to 31 March 2025 under Eskom’s capacity expansion programme resulting in a cumulative increase of 16 328MW (2024: 15 529MW) in installed generation capacity, 8 915km (2024: 8 622km) in high-voltage transmission lines and 42 148MVA (2024: 39 528MVA) in substation capacity to the national grid. Completion of the programme is expected by 2028. Units 5 and 6 of Kusile power station successfully entered commercial operation on 30 June 2024 and 29 September 2025 respectively with both units contributing 799MW each of installed capacity to the grid. The final completion of the Kusile power station is expected in 2028. The Kusile power station was fitted with wet flue-gas desulphurisation emission abatement technology in line with current international practice to ensure compliance with air quality standards. Kusile units 1, 2 and 3 were offline since October 2022 after the failure of the flue-gas duct. DFFE provided the necessary approvals to operate the temporary stacks at relaxed sulphur dioxide emissions levels while repairs were undertaken to the west stack. The three units were returned to service using temporary stacks around a year later and assisted in alleviating generation supply constraints. The reinstatement of the flue-gas desulphurisation and main stack for units 2 and 3 were returned to service by year end. Unit 1 was taken offline on 31 March 2025 for a planned outage and was returned to service on 4 June 2025. All three units have been connected to the permanent stack. Medupi unit 4 was returned to service on 6 July 2025, eight months ahead of the scheduled return date, after the generator explosion in August 2021. All six units at Medupi power station are in full commercial operation and supplying energy to the national grid. The interventions to correct major plant defects at new build projects will ultimately ensure that the plant achieves contractual levels of performance. The measures taken to address the major plant defects have led to a steady improvement in the availability and reliability of the units at Medupi and Kusile power stations. The technical solutions for major defects and the associated rollout at Medupi and Kusile power stations were completed by December 2024 in collaboration with the contractor with total costs incurred for addressing boiler plant defects at both stations amounting to R589 million by 31 March 2025. The contractual process to determine the liability for these defects is ongoing with the responsible parties being held to account within the provisions of the related contacts. Completion of the remaining scope on the balance of plant work, executing major plant defect repairs and resolving contractual and commercial matters towards Medupi power station project close-out remains key focus areas with full project completion scheduled for December 2027. The Medupi power station flue-gas desulphurisation project is a longer-term priority to ensure environmental compliance. The World Bank (main funder) is regularly updated on the progress, status and challenges with several key activities. The original approved budget and planned project completion will be re-evaluated after certain key activities are completed. ABC 4 A total of 292.6km (2024: 74.4km) of transmission lines were installed during the year with significant progress made on four major transmission projects which resulted in the target of 286km being exceeded. The transformer capacity installed and commissioned of 2 620MVA (2024: 23MVA) during the year exceeded the target of 2 380MVA as a total of 2 040MVA transformer capacity was commissioned at six substations and there were three self-build projects by customers totalling 580MVA. Eskom continues to connect previously disadvantaged households and farm dweller houses in licensed areas of supply under the electrification programme funded by the government. Connections of 83 031 (2024: 114 800) households were completed during the year against a target of 44 974 household connections. A total of 124 power purchase agreements were in place at 31 March 2025 with a total capacity of 10 216MW and 95 (2024: 90) renewable energy IPP projects with a capacity of 6 180MW (2024: 6180MW) are in operation. The group also procured energy from two peaker IPP OCGTs with a capacity of 1 005MW and through short-term programmes and the Risk Mitigation IPP Procurement Programme with a capacity of 160MW and 150MW respectively. Refer to page 98 of the integrated report for more information. Financial performance Performance EBITDA performance of the group improved significantly by R55.6 billion to R99.0 billion (2024: R43.4 billion) mainly because of increased revenue in the current year, reduced primary energy costs and the refunds received from SARS relating to the resolution of the fuel levy rebate dispute. The profit before tax of R23.9 billion (2024: R25.5 billion net loss) reflected an improvement in performance of R49.4 billion. The net profit after tax of R16.0 billion (2024: R55.0 billion net loss) also improved by R71.0 billion compared to the prior year which included the derecognition of the deferred tax asset of R36.6 billion. Revenue increased by R45.1 billion to R340.9 billion (2024: R295.8 billion) mainly because of the standard tariff increase of 12.7% allowed by the National Energy Regulator of South Africa (NERSA) in addition to a 3.5% year-on-year growth in sales volumes of 6 412GWh to 189 723GWh (2024: 183 311GWh). The revenue figure includes the negative impact of revenue not recognised of R23.8 billion (2024: R17.2 billion) where collectability criteria were not met, offset by R11.9 billion (2024: R8.3 billion) revenue recognised from customers on the cash basis. The average electricity price amounted to 187.97c/kWh (2024: 165.43c/kWh) for the year. The graph below reflects the comparison between sales volumes and electricity revenue over the last five years. Rbn TWh 400 250 350 200 300 250 150 200 100 150 100 50 50 Sales volume (TWh) 0 0 Electricity revenue (Rbn) 2021 2022 2023 2024 2025 Primary energy expenses decreased to R150.2 billion (2024: R173.7 billion) for the year, although there was an increase in production of 8 728GWh. Eskom’s own generation costs decreased to R98.0 billion (2024: R117.9 billion) for the year which consists mainly of less expensive coal generation. Expenditure on the combined Eskom-owned and IPP OCGT costs decreased to R17.7 billion (2024: R33.9 billion) (excluding fuel rebate adjustments) because improved coal-fired plant performance resulted in lower production of 2.8TWh (2024: 5.1TWh). Total IPP expenditure decreased to R45.6 billion (2024: R47.8 billion) mainly due to improved performance at Eskom’s coal-fired power stations which resulted in lower production required from emergency and IPP OCGT sources to augment supply. Employee costs increased by R8.1 billion to R43.2 billion (2024: R35.1 billion) for the year, representing an increase of 23.0% compared to the prior year largely due to employee salary adjustments, reimplementation of the short-term incentive scheme (STI), an increase in production bonuses awarded due to improved operational performance as well as a 3.5% increase in headcount. Other expenses increased by R2.7 billion to R44.1 billion (2024: R41.4 billion) for the year, mainly due to additional repairs and maintenance, plant operating costs in line with the Generation Recovery Plan and the write-off of costs capitalised for certain assets under construction. The impairment on financial assets amounted to R7.3 billion (2024: R3.0 billion) for the year, mainly relating to overdue municipal receivables. The write down on other assets amounted to R0.3 billion (2024: R0.4 billion) which relates mainly to the value added tax (VAT) portion on cash receivables (R0.4 billion) offset by inventory adjustments (R0.1 billion). Depreciation decreased by R1.4 billion to R31.8 billion (2024: R33.2 billion) representing a 4.4% decrease compared to the prior year. The decrease is mainly because of generation plant life extensions in line with the continued operations strategy as well as the life extension of Koeberg unit 1 after approval of the long-term operating licence for another 20 years by the National Nuclear Regulator in July 2024 partially offset by an increase in depreciation as Kusile unit 5 was transferred into commercial operation on 30 June 2024. The group recorded a net fair value and foreign exchange loss on financial instruments, excluding embedded derivatives of R2.6 billion (2024: R0.9 billion gain) for the year. Financial instruments are largely impacted by interest rate and exchange rate movements as well as credit risk and hedge effectiveness adjustments. The loss is largely due to increased losses on foreign currency translations related to debt securities and borrowings compared to the prior year. A net fair value loss of R7.8 billion was recorded on embedded derivatives (2024: R1.7 billion gain), mainly because of the downturn in the ferrochrome market resulting in reduced consumption forecasts (hardship was cited by Glencore and Samancor chrome customers under the contractual terms) and lower ferrochrome spot price as well as other market dynamics. ABC 5 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Financial performance (continued) Performance (continued) Net finance costs decreased to R33.1 billion (2024: R38.4 billion) for the year linked to lower interest on debt securities and borrowings (including shareholder loans) and higher finance income. Finance costs decreased by R3.3 billion and finance income increased by R2.0 billion. The financial solvency ratios improved mainly due to the improvement in EBITDA. The net debt to equity ratio improved to 1.29 (2024: 1.80) with net debt decreasing to R358.7 billion (2024: R401.1 billion) and equity increasing to R278.3 billion (2024: R222.9 billion). The net debt service cover ratio improved to 1.11 (2024: 0.46) and cash interest cover ratio improved to 2.76 (2024: 1.18). Liquidity remains under pressure despite the improved ratios, given Eskom’s financial and operational challenges and future infrastructure investment requirements. An amount of R2.6 billion (R2.4 billion plus interest) was set aside in treasury investments to fund future nuclear decommissioning activities as directed by the National Nuclear Regulator whilst discussions regarding a permanent solution are underway. Cash and cash equivalents increased to R63.8 billion (2024: R23.6 billion), mainly because of the improved cash from operations during the year and the government support which assisted Eskom in meeting debt servicing requirements. The balance includes R16.4 billion that was earmarked for the funding of decommissioning activities and clean energy projects consisting of a further R4.3 billion for nuclear decommissioning activities as well as R3.0 billion for long-term coal decommissioning activities and R9.1 billion for clean energy projects. The funds set aside and earmarked for decommissioning activities represent partial funding for the decommissioning liabilities at 31 March 2025. Refer to note 28. The graph below reflects the movement in net debt as well as the debt-to-equity and net debt service cover ratios over the last five years. Rbn Ratio 500 4 400 3 300 2 200 1 100 Net debt-to-equity (ratio) Net debt service cover (ratio) 0 0 Net debt (Rbn) 2021 2022 2023 2024 2025 Gross debt securities and borrowings decreased by R39.5 billion to R372.7 billion (2024: R412.2 billion), largely because of continued compliance with the debt relief conditions and ministerial approval for the conversion of the shareholder loan tranches to equity. Eskom received R64 billion (2024: R76 billion) of debt relief support from the shareholder by 31 March 2025. The group repaid R46.4 billion (2024: R54.6 billion) of debt and raised R8.7 billion (2024: R23.6 billion) of debt from existing facilities. Total debt servicing outflows, including interest and capital payments, amounted to R79.8 billion (2024: R89.8 billion) for the year. Net cash from operating activities improved significantly to R85.9 billion (2024: R40.4 billion) due to improved EBITDA and management of working capital. Despite these improvements, the long-term profitability of Eskom remains dependent on various factors including sustaining the improved technical and financial performance recorded during the year. The graph below shows the movement in cash from operating activities as well as the cash interest cover and net debt service cover ratios over the last five years. Rbn Ratio 100 3 90 80 70 2 60 50 40 1 30 20 10 Cash interest cover (ratio) Net debt service cover (ratio) 0 0 Cash from operating activities (Rbn) 2021 2022 2023 2024 2025 The total gross municipal arrear debt increased by R20.2 billion to R94.6 billion (2024: R74.4 billion) at year end with 27.0% (2024: 29.3%) owed by Free State municipalities. The top 20 defaulting municipalities constitute 75.2% (2024: 75.2%) of total invoiced municipal arrear debt. ABC 6 The graph below reflects the increase in the gross arrear municipal debt per province and the breakdown between the net impairment, interest and revenue not meeting collectability criteria over the last five years. Rbn 100 90 80 70 60 50 40 30 Other (Rbn) 20 Gauteng (Rbn) Mpumalanga (Rbn) 10 Free State (Rbn) Net impairment (Rbn) 0 Interest and revenue not meeting collectability criteria (Rbn) 2021 2022 2023 2024 2025 A total of 63 municipalities of the 71 municipalities approved for participation in the municipal debt relief programme did not fully settle their current accounts by March 2025 (taking into account subsequent payments received until 7 April 2025). These municipalities have a combined overdue current account amounting to R25 billion at 31 March 2025 and include only five municipalities with an overdue current account of one month during the year. Breach notifications have been issued to 59 of the 63 non-compliant municipalities. Eskom advised National Treasury of the non-compliant municipalities that failed to pay their current accounts on time and requested National Treasury to engage with the affected municipalities to implement remedial action. National Treasury issued instruction letters to Eskom during the year to write-off one-third of the ringfenced debt for 14 municipalities to the value of R3.5 billion. Eskom wrote off R0.5 billion during the year relating to nine of these municipalities that met the debt relief conditions during the compliance cycle. The remaining five municipalities complied with the conditions of the municipal debt relief programme after the amendment of the conditions and R3 billion will be written off in 2026. A further five municipalities met the compliance cycle conditions for 12 consecutive months during the year with another five municipalities meeting the conditions in May 2025 and August 2025. Write-off instructions for these municipalities were received from National Treasury on 24 June 2025, 7 August 2025 and 22 August 2025. The write-off of R0.6 billion will be processed in 2026. Refer to note 5.1.1. The arrear debt owed by City of Tshwane and City of Johannesburg metropolitan municipalities has continued to escalate. Eskom is engaging with these metros and pursuing its legal rights through the courts. The City of Tshwane and Eskom concluded a five-year payment arrangement plan in November 2024 that was recognised as a loan receivable. An agreement was reached with the City of Johannesburg in June 2025 for the settlement of the outstanding debt over the next four years. NERSA tariff and Regulatory Clearing Account decisions Revenue growth by migrating towards a more appropriate tariff path remains a focus area for the group. NERSA awarded Eskom an average standard tariff increase of 12.7% for 2025 (multi-year price determination (MYPD) 5 covering 2022 to 2025) and announced the MYPD 6 determination on 30 January 2025 that awarded Eskom an average standard tariff increase of 12.7%, 5.36% and 6.19% for 2026, 2027 and 2028 respectively. Eskom assessed the decision and submitted a review application to the High Court on 29 June 2025 to set aside the decision made by NERSA. NERSA approved a settlement of R54 billion (to be endorsed by a court order) in favour of Eskom on 8 August 2025 (accepted by Eskom on 11 August 2025) which resulted in additional revenue recovery of R12 billion for 2027 and R23 billion for 2028. The standard tariff increase is estimated to increase to 8.76% and 8.83% for 2027 and 2028 respectively. The recovery of the remaining balance is still to be determined by NERSA. The lack of a longer term tariff outlook beyond the three years covered by MYPD 6 poses a risk to financial sustainability and development of appropriate financial strategies as it limits the ability of Eskom and its customers to plan for the future. Eskom and the Minister of Electricity and Energy will be engaging with NERSA and other stakeholders on a long-term tariff outlook. Eskom submitted a proposed retail tariff plan to NERSA in September 2024 (included changes to tariff charges and rates to ensure that customers only pay for the costs they incur). This was a separate process to the MYPD 6 application to ensure that electricity tariffs reflect the costs approved by NERSA while considering affordability, fairness and transparency. NERSA approved the retail tariff plan application on 18 February 2025 for implementation in 2026 except for the generation capacity charge which will be implemented over three years at a reduced amount in each of the three years. The annual Eskom Retail Tariffs and Structural Adjustment application for 2026 incorporates the approved retail tariff plan and was approved by NERSA on 11 March 2025 effective from 1 April 2025. Eskom review applications submitted to the High Court Revenue decision for 2020 to 2022 (MYPD 4) NERSA was required to include an additional R15 billion in allowable revenue per year from 2024 to 2026 and R14 billion in 2027 in terms of the court order. NERSA complied with the court order in its MYPD 5 revenue decision for 2024 and 2025. RCA applications relating to prior years RCA decisions for 2015 to 2021 Eskom accepted the decision made by NERSA for the recovery of R3.3 billion relating to the regulatory clearing account (RCA) decision for 2020 (MYPD 4) to be recovered equally over three years (R1.1 billion per year from 2025 to 2027) from standard tariff customers. The remaining R135 million will be recovered from local special pricing arrangement customers and international customers. A decision was received from NERSA on 5 May 2025 for the settlement of RCA cases relating to 2015 to 2021 totalling R40.2 billion. This was endorsed through a court order on 9 May 2025. The recovery of the settlement will be determined by NERSA after following their governance processes. ABC 7 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Financial performance (continued) NERSA tariff and Regulatory Clearing Account decisions (continued) RCA applications relating to prior years (continued) RCA decision for 2022 (MYPD 4) Eskom submitted a RCA application to NERSA of R23.9 billion in favour of Eskom in April 2023 resulting mainly from revenue, primary energy and operating cost variances. NERSA released its decision on 2 August 2024 to award a RCA balance of R8.1 billion in favour of Eskom. The reasons for decision document was published in March 2025. The timing of the RCA recovery through future tariffs will be determined by NERSA. RCA decision for 2023 (MYPD 5) Eskom submitted a RCA application for 2023 of R9 million in favour of Eskom to NERSA on 24 January 2024. The application was considerably lower than previous financial years as the revenue variance was much lower because of the impact of loadshedding. NERSA approved a RCA balance of R232 million in favour of customers on 27 March 2025. NERSA published the reasons for the decision in May 2025 with the timing of the RCA recovery still to be determined. RCA application for 2024 (MYPD 5) The RCA application for 2024 has been delayed because of the late finalisation of the 2024 annual financial statements. The application is in the process of being compiled and will be submitted to NERSA following the necessary governance processes. Funding The group has a centralised treasury function. The funding and liquidity activities are overseen by a general manager who is the group treasurer and Eskom’s debt officer and has the relevant experience and expertise for this role. Mr R Vaughan fulfilled this role until his resignation in August 2024 when Mr K Masike took over the role from 20 August 2024 after his appointment as acting general manager. Eskom received a total of R140 billion in debt relief support from government since implementation of the Eskom Debt Relief Act, 7 of 2023. A total of R64 billion (recognised as a loan from the shareholder) was received in 2025 of which R8 billion was approved for conversion to equity on 21 October 2024 and the remaining R56 billion on 11 June 2025. The Eskom Debt Relief Amendment Act, 5 of 2025, that was enacted on 3 September 2025 replaced the original envisaged final R70 billion in debt takeover of long-dated debt by government with loans totalling R50 billion that will be convertible into equity subject to conditions being met. This will increase the support received from government in 2026 by R40 billion (total support of R80 billion) which will assist Eskom with a large domestic bond redemption of R39.5 billion due in April 2026. The balance of R10 billion will be received in 2029 to assist with the redemption of a domestic bond of R13.7 billion maturing in May 2028. Eskom incurred R382 million in interest on the debt relief support received during the year after the amendment to the Eskom Debt Relief Act, 7 of 2023. Interest is charged on all debt relief support received from 2025 payable in cash until the related loan is converted to equity. The repayment profile of the total debt book for Eskom at 31 March 2025 includes interest payments of R102 billion (2024: R120 billion) and debt repayments of R120 billion (2024: R210 billion) over the next five years. The availability period of the R350 billion guarantee framework agreement expired on 31 March 2023. Eskom could therefore no longer apply for new guarantees under the framework agreement. The expiry of the availability period does not impact the existing guarantees in issue which will remain in place until the related debt is settled. All other operational and relevant capital expenditure spending are financed through operational cash flows and drawdowns from existing project related loan agreements. Drawdowns from development finance institutions and export credit agencies amounted to R8.7 billion (2024: R7.5 billion) during the year. Eskom is targeting development finance institutions and export credit agency drawdowns of R13.4 billion over the next five years (2026 to 2030). It is anticipated that new incremental debt will be raised through a combination of development finance institutions and conventional capital market activities from 2028 onwards to fund the capital expenditure required for emission reduction, renewable energy generation as well as transmission network expansion. Refer to page 90 of the integrated report for more information. Legal separation The commencement of trade by NTCSA on 1 July 2024 was a key milestone in the legal separation process. The lessons learnt from the transmission separation are being incorporated into the remainder of the legal separation process. NTCSA is fulfilling the role of the transmission system operator in the interim from the effective date of the Electricity Regulation Amendment Act, 38 of 2024, (1 January 2025) until the transmission system operator is established. The establishment of the independent electricity market is underway. A draft market code was developed and published for stakeholder comment. The required legal due diligence was completed and subsequent revisions to the code was concluded. There was a second round of stakeholder comments until 18 September 2025 and submission to NERSA is expected once the process is complete. A market operator licence application was approved by the NTCSA governance structures and submitted to NERSA in May 2025. NERSA rejected the application in July 2025 as it was considered inadequate and requested, amongst other requirements, the simultaneous submission of the market code. Engagement with NERSA confirmed the simultaneous submission of the market code was not required. The application was resubmitted on 25 July 2025 with additional information. The application of the licence has been advertised and hearings are expected to take place at the end of September 2025. The corporatisation and operationalisation of the National Electricity Distribution Company of South Africa SOC Ltd (NEDCSA) is deferred due to the delayed operationalisation of NTCSA and external dependencies including inter-ministerial alignment. The liquidity and solvency of distribution due to the escalating municipal arrear debt is a key area. A solution to ensure the financial sustainability of distribution is critical for the success of the transaction and will impact timelines. The legal separation of generation is dependent on the establishment and operationalisation of a new holding company. The process and timing to establish the new holding company is dependent on legislation and government policy. The focus is to finalise the remaining power purchase agreements, ringfence all aspects of generation from corporate and develop a future-fit generation operating model and structure that incorporates the generation clean energy business portfolio. ABC 8 Governance and compliance The enhancement of systems, controls, resources, reporting structures, policies and procedures remain key focus areas to address and rectify various governance and compliance challenges that the board is committed to as well as support the fight against fraud, crime and corruption. These enhancements are not yet fully effective as there are still areas that require significant improvement even though some progress has been made. Non-technical energy losses Eskom is addressing the challenge of non-technical energy losses (reported as losses due to criminal conduct in note 51.3) through a multi-faceted approach which will assist with, amongst others, recovery of lost revenue and preventing losses from increasing. These include: • Field interventions such as physical audits and meter fixes. • Reducing the number of zero buyers with the KRN rollover project, zero buyers reduction programme and other awareness initiatives. • Customer education campaigns about the dangers of illegal connections and the consequences of tampering of meters and illegal vending. • Installing smart prepaid meters with enabled remote control that allows for software updates, disconnecting of defaulting customers and load management. • Reducing illegal connections with enhanced security law enforcement and retrieving of illegal credit dispensing units. • Reducing illegal or ghost vending with enhanced system detection capabilities. The investigation into the online vending system breach continues. Eskom has taken proactive steps to strengthen systems and restore public confidence. Progress has been made in enhancing and protecting the related infrastructure to ensure greater resilience and reliability. These enhancements to strengthen the online vending environment are ongoing and were not yet completely effective at year end. Interventions implemented include the following: • Established a war room that is focusing on reducing illicit prepaid electricity tokens providing insights into mitigation measures and implementing security enhancements to improve the physical, logical and operational securing of the token vending system. • Strengthened controls and detection capabilities in the online vending ecosystem with enhanced management and security protocols such as upgrading of internal firewalls, adopting new technologies, successful penetration testing and restricting external access to authorised national vendors. • Implemented measures to safeguard the system by reinforcing physical infrastructure and limiting both physical and digital access. • Disconnecting, issuing of penalties and criminally charging customers where it was confirmed that illegal generated tokens were loaded onto meters. • Investigating options to prevent the use of previously generated 600kWh illicit tokens. • Enhanced monitoring capabilities by tracking unusual activities across the online vending ecosystem for greater transparency and timely reporting of irregular incidents. • Ongoing collaboration with law enforcement agencies to support investigations, ensure accountability and identify those who gained financially. Consequence management was done for employees found guilty based on investigations completed to date. The scope of investigations has been extended and is ongoing. Implicated internal employees have been placed on precautionary suspension pending further review with their access revoked. • Improved in-house capabilities with support from an external forensic firm to better manage risks and safeguard operations. • Transitioning the responsibility of the key management centre back to the Standard Transfer Specification Association to address risks associated with managing encryption of vending keys. • Coordinated system upgrades through a structured change management process. • Oversight by the audit committee and regular reporting to the board. • Improved internal governance processes including segregation of duties. • Accelerating acquisition of a secure online vending system to replace the current system and prevent future incidents. • Enhanced cyber security requirements including updated vending agency agreements where vending agents are required to submit independent assurance reports. The interventions resulted in an observed downward trend in the number of illicit prepaid electricity tokens created and the number of zero buyers by the end of March 2025. Addressing crime, fraud and corruption One of the priorities of the board has been to restore good governance, strengthen internal controls and promote accountability. Significant attention has been given to fighting crime, fraud and corruption across the group by addressing issues stemming from weaknesses in the internal control environment, strengthening investigative capacity and consequence management processes. The board acknowledges that addressing these issues is essential to securing Eskom’s long-term sustainability and rebuilding stakeholder confidence and recognised this as a complex, multi-year undertaking that will demand a sustained effort. An independent assessment of the crime risk landscape of Eskom identified areas requiring enhanced oversight and control. These included vulnerabilities in fraud prevention, cyber security and physical asset protection. It also highlighted the need for clearer accountability, improved training as well as more robust systems and processes to support whistle-blowing, procurement transparency and compliance. The enhancement of organisational structures, together with strengthening people, processes and systems, has been critical to restore the capability of Eskom to effectively address governance and compliance challenges. The board adopted a multi-pronged approach to combatting crime, fraud and corruption, centred around prevention, detection, investigation and corrective action. Preventative efforts have focused on reinforcing ethical behaviour as well as strengthening governance and controls supported by improved systems and processes. Detection capabilities have been enhanced to allow for more effective monitoring and identification of unlawful behaviour. Eskom has also invested in building internal capacity and adequately resourcing specialist functions to investigate and respond to incidents swiftly and decisively, reinforcing a culture of accountability. Corrective actions aim to ensure that lessons from past incidents are translated into tangible improvements, including improved consequence management, supplier oversight and closer collaboration with law enforcement to recover losses and prevent recurrence. Refer to the fighting crime, fraud and corruption section in the integrated report for further information. The mandate of the group investigations and security department is to perform independent forensic investigations into cases of crime, fraud and corruption as well as other irregularities and implement recommendations arising from these forensic investigations to timeously address consequence management. A dedicated project management office was established to address the backlog of forensic investigations and disciplinary cases against employees and suppliers. The project management office refers all completed cases involving crime, fraud and corruption to law enforcement agencies as well as the group investigations and security department for further investigation and to fast-track conviction and recovery processes. A rapid response unit was recently established within the group investigations and security department to strengthen Eskom’s capacity to combat high revenue loss crimes and to ensure the timeous investigation of high-priority infrastructure and economic crimes. The unit is being equipped with the necessary resources to support proactive and coordinated responses to existing and emerging threats through streamlined, intelligence-driven organised crime investigations. The focus will be on optimising remediation efforts by consolidating high-risk cases for investigation. ABC 9 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Governance and compliance (continued) Addressing crime, fraud and corruption (continued) An internal breach of the Eskom SAP enterprise financial accounting system occurred in December 2024. An investigation found that an employee used unauthorised software to capture user credentials with inappropriate and elevated rights to gain access to the SAP system enabling the creation of fraudulent payments. There was no financial loss incurred as the payments were immediately stopped when discovered. A consequence management process is in progress. A SAP war room was set up to investigate the breakdown of controls and oversee the implementation of corrective and enhanced preventative measures as a key focus area. Significant advancements were made to enhance cyber security protection including improved software for endpoint security protection aimed at detecting advanced cyber threats to address limitations and vulnerabilities of legacy endpoint security technology. The improved detection tools added greater levels of security. Processes have also been enhanced to prevent breaches from occurring in the future. The incompatibility of certain outdated and unsupported operating technology systems to new endpoint security and the legislative hurdle of data storage outside South Africa resulted in some business components not transitioning to new endpoint security timeously which was subsequently addressed as a priority. Ethics management Eskom employees are required to submit a declaration of interest by 30 June of every year regardless of whether a conflict exists and to update their declarations as soon as circumstances change. The declaration system has been enhanced to identify politically exposed persons. The system also integrates with the Companies and Intellectual Property Commission database to verify active directorships. Eskom employees are also required to apply and obtain annual approval to perform private work. Failure to submit a declaration, obtain prior approval for private work or declare a conflict of interest is considered non-compliance with Eskom’s conflict of interest policy and all non-compliant employees will be subjected to investigation and disciplinary action. Non- executive directors are also required to make a declaration of interest. The disclosure rate and compliance with the annual declaration of interest process at 31 March 2025 indicated that 99.8% (2024: 99.7%) of employees and all executive committee (Exco) and board members complied with the process. Verification of the declarations made by board and Exco members found no deviations. All individuals acting on behalf of Eskom, including suppliers, are required to uphold the ethical standards of Eskom. Suppliers found to be in contravention of the Eskom Code of Ethics are also subject to disciplinary processes and potential sanctions. The ethics office in Eskom continues to play a vital role in implementing ethics and providing guidance on ethical matters in the workplace, developing and monitoring ethics-related policies as well as facilitating mandatory annual ethics training for all employees. The office is also responsible for referring matters of unethical behaviour involving crime, fraud and corruption to the forensic function for investigation. An independent ethics risk assessment was conducted by The Ethics Institute to identify, assess and manage ethics-related risks within the organisation. The assessment provided valuable insights into the strengthening of ethical practices. The actions identified are being implemented and monitored. The ethics strategy and management plan were revised and approved in August 2024, assisting the board to address ethics and integrity matters in an integrated manner. Key policies, including the code of ethics as well as the conflict of interest, fraud prevention and whistle-blowing policies, have been reviewed and approved to enhance compliance across the organisation. The ethics training content was updated and the mandatory requirement to complete the training has been communicated to employees. Eskom will also roll out the staff ethics awareness programme by The Ethics Institute to all employees from 2026. Eskom encourages all stakeholders to report suspected incidents of unlawful or unethical conduct involving directors, employees or suppliers through Eskom’s independent whistle-blowing hotline or government’s anti-corruption channels. These mechanisms are designed to ensure confidentiality, protect whistle- blowers and uphold the integrity of the reporting process. Consequence management Disciplinary action was recommended against 82 employees (2024 :167) during the year based on findings from completed forensic investigations, while 195 disciplinary recommendations relating to the current and prior years were concluded, reducing the backlog of cases. Eskom flags employees who resign before disciplinary processes or investigations are concluded on its human resources database. These individuals cannot be employed in Eskom for 10 years and cannot serve as an employee of a contractor on Eskom sites. Forensic recommendations for disciplinary action against 91 employees were pending finalisation at year end. A total of 60 of the 91 employees are awaiting initiation of disciplinary processes by the managers of the respective employees, disciplinary hearings are underway for 30 employees and a charge sheet was issued to one employee for finalisation. Focus remains on implementing and improving the effectiveness of consequence management in the organisation. Several interventions are in the process of being implemented. The people relations and the group investigations and security departments are working together to ensure that the managers of affected employees act promptly to address forensic recommendations. The monitoring and close-out of long-outstanding disciplinary actions improved with monthly follow up and external support received from accredited labour dispute bodies. Eskom initiates a supplier review process where forensic investigation confirm that suppliers failed to declare a potential conflict of interest or engaged in misconduct and have been proven to have benefitted unduly. The supplier review committee and Exco tender committee evaluate cases against suppliers based on respective level of authority and determine disciplinary action to be implemented. The status of 43 suppliers was considered by the Exco tender committee during the year of which 25 suppliers received sanctions for removal from the Eskom supplier database with referral to National Treasury for restriction. Suspended sanctions were issued to eight suppliers which could be removed from the supplier database of Eskom if any further non-compliance is committed during the suspension period. Purchasing blocks were implemented for two suppliers pending finalisation of criminal matters. The remaining eight suppliers were found not guilty with no further action recommended. The supplier review committee considered the status of an additional 22 suppliers since its first meeting in October 2024. A total of 19 suppliers received sanctions for removal from the supplier database or blocking on the procurement system of Eskom, two suppliers received suspended sanctions and one supplier was found not guilty with no further action recommended. Forensic investigation Eskom continues to monitor forensic investigation proceedings and support law enforcement agencies in their work. A total of 66 (2024: 172) new criminal cases were opened during the year. A total of 247 open cases were registered with South African Police Services (SAPS) for criminal investigation at year end, with 227 matters reported to the Hawks in terms of the Prevention and Combatting of Corrupt Activities Act, 12 of 2004. Of these, 20 cases were at trial stage at various magistrate and specialist commercial crimes courts by year end and a further 63 cases have been through the criminal proceedings provided for under the Criminal Procedure Act, 51 of 1977. ABC 10 Forensic investigations during the year revealed recurring themes, including procurement and recruitment irregularities, undeclared conflicts of interest involving both suppliers and employees and other forms of fraud and corruption. These findings highlight the need for stronger compliance with well-established policies and procedures and more robust management supervision and monitoring. Remedial actions were recommended where control deficiencies were identified to prevent recurrence although a stronger focus is required to prevent repeat incidents. Fraud prevention Eskom’s fraud prevention plan sets out critical actions to prevent, detect, respond to and mitigate the risk of crime, fraud and corruption and is monitored by the anti-fraud and corruption integration management committee. The plan is reviewed and updated annually and consolidates ongoing initiatives with new interventions to address emerging risks. The following outcomes, amongst others, were achieved during the year through the implementation of the plan: • Developed and rolled out a programme to enhance skills of investigators. • Strengthened partnerships with law enforcement agencies, including the Special Investigating Unit (SIU), Hawks and SAPS to drive impactful investigative outcomes. • Implemented mandatory fraud awareness training for all employees and developed a fraud prevention training framework to conduct targeted training at high-risk areas. • Extended anti-fraud and corruption awareness campaigns to suppliers and employees. • Continued with the ongoing integration of the forensics function within the group investigations and security department and progress made to obtain a central repository for investigations. • Established a dedicated project management office to expedite on the backlog of old outstanding investigations. • Reestablished the supplier review committee to enhance supplier consequence management. • Reviewed and tested the central supplier database for informal tendering of National Treasury which was successfully implemented in generation and is being extended throughout the group. • Piloted e-tendering for formal tenders. • System enhancements introduced to the e-auction system to enable greater competition and transparency in pricing. • Implemented security clearance vetting in line with the requirements of the Risk Integrity and Management Framework of Government and the vetting policy of Eskom. • Continued with ongoing support to management for the implementation of employee disciplinary processes and improving oversight and management accountability. • Reviewed divisional fraud risk registers to improve leadership accountability and coordination of treatment plans as well as identified and consulted on areas that require enhancements. • Deployed transaction monitoring and data analytics to detect control weaknesses and process risks. • Established interventions in response to the SAP and online vending system control deficiencies and to enhance collaboration between the affected business units of Eskom and assist in comprehensive investigations where necessary. Other initiatives to mitigate fraud and corruption risks include the modernisation of the procurement systems with automated procurement tools, implementation of coal automation systems to monitor coal delivery from mines to power stations and improve coal quality assurance. A service provider has been appointed to assist with the use of analytical and forensic tools to identify transactions and anomalies that should be investigated for potential crime, fraud and corruption as well as to build this capability within Eskom which will assist with the enhancement of systems and controls and implementation of digital tools to support early detection of fraud and corruption. Eskom subscribes to the principles and practices of the King IV TM Report on Corporate Governance for South Africa (King IV TM) and conducts an annual assessment of its application thereof. Public Finance Management Act, 1 of 1999 compliance The particulars of irregular expenditure, fruitless and wasteful expenditure as well as material losses due to criminal conduct as required by section 55(2)(b) of the PFMA are reported in accordance with legislative prescripts set out by National Treasury in note 51 and the integrated report. The identification of all occurrences of irregular as well as fruitless and wasteful expenditure, conducting assessments and determinations (investigations) thereof as well as oversight of consequence management, such as disciplinary action, condonations and recovery of losses remains a key focus area. The PFMA reporting procedure is being revised in line with the latest National Treasury Instruction. Updated PFMA training will be implemented in 2026 after the revised procedure has been approved to strengthen compliance and enhance reporting practices. The condonation process instruction for irregular expenditure has been approved and awareness sessions were undertaken in collaboration with the Eskom Academy of Learning. The fruitless and wasteful process instruction is in the process of approval. These instructions will be incorporated into the Eskom revised PFMA reporting procedure. National Treasury granted Eskom a departure from the requirement to disclose PFMA amounts inclusive of VAT in terms of section 79 of the PFMA. Eskom has historically reported all PFMA amounts excluding VAT and continued to do so in the current year. Eskom again received a qualified opinion relating to the quantification and disclosure of information required in terms of the PFMA (irregular expenditure and losses due to criminal conduct) as associated financial records were not complete or accurately maintained in line with legislative requirements. The auditors raised material findings in respect of the lack of completeness and accuracy of PFMA information reported by Eskom, both relating to the current year and cumulative balance. Fruitless and wasteful expenditure was not qualified in the current year. The audit recovery programme initiated during the year, led by the group chief financial officer, aims to prevent audit qualifications in the future as well as focuses on strengthening, monitoring and tracking of the external audit process by enhancing transparency and visibility by embedding sustainable improvements in financial management, compliance and internal control practices across the organisation. The programme will improve the PFMA control environment in future years with the intended impact expected to be visible over a three-year period, although it will not address all the historical deficiencies. Oversight of the programme is exercised through the external audit oversight committee which is chaired by the group chief executive. This committee reinforces executive accountability, promotes cross-functional collaboration and aligns the programme with the Eskom broader governance and reform agenda of Eskom. The programme focuses on the following: • Strengthening internal controls to ensure accurate and reliable financial reporting. • Promoting strict adherence to Eskom’s policies, processes and procedures. • Addressing non-compliance with the PFMA through corrective measures and compliance monitoring. • Enhancing audit readiness, enabling Eskom to respond proactively to audit requirements as well as closure of existing audit findings. ABC 11 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Governance and compliance (continued) Public Finance Management Act, 1 of 1999 compliance (continued) The programme (through awareness campaigns and employee engagement sessions) aims to instill a culture of accountability and ownership across the business as sustainable improvement depends both on process enhancements and the active commitment of all employees. Irregular expenditure Irregular expenditure amounted to R1.5 billion (2024: R5.6 billion restated) for the year of which new matters incurred in 2025 amounted to R0.5 billion (2024: R0.4 billion). The balance related to existing multi-year contracts that will continue to attract irregular expenditure until condoned or expired. The expenditure for the comparative period was restated due to prior year expenditure that was only confirmed as irregular in the current year. The process of collecting information and reporting on irregular expenditure continues to be a focus area although it is expected that new instances of irregularities will continue to be detected as the group continues with governance clean-up initiatives such as the audit recovery programme. Fruitless and wasteful expenditure and criminal conduct Fruitless and wasteful expenditure incurred during the year amounted to R20.0 million (2024: R13.0 million restated) with 37 (2024: 46 restated) incidents of fruitless and wasteful expenditure for the group. Incidents of fruitless and wasteful expenditure cannot be closed until consequence management has been undertaken or valid reasons to not institute consequence management have been provided. The fruitless and wasteful expenditure must be recovered or written off as irrecoverable to fully address the incident for reporting purposes. Losses due to criminal conduct of R7.2 billion (2024: R6.7 billion) were reported during the year with the majority related to estimated non-technical energy losses. There is a cost associated with delivering the electricity with no corresponding revenue recognised. The non-technical energy losses cannot be recognised as revenue as it cannot be reliably quantified, recovery is not expected to be probable and there is no valid contract or tacit agreement for the supply of electricity. Only material losses due to criminal conduct are reported in the annual financial statements and integrated report. Matters are regarded as material where an individual incident or class of closely related incidents exceed R25 million in line with the Significance and Materiality Framework. Investigations related to non-technical energy losses are ongoing and there is continual collaboration with other state-owned entities that are affected by similar challenges, industry role players, SAPS and the National Prosecuting Authority to combat these losses. Board and executive committee changes The Eskom board should consist of a minimum of three and maximum of 15 directors with the majority being non-executive directors in terms of the memorandum of incorporation. The current board comprised of 13 directors at year end including 11 independent non-executive directors and two executive directors. There were no changes to the composition of the board during the year. The revision of Eskom’s memorandum of incorporation authorised the shareholder to appoint a lead independent director to strengthen governance and oversight. An existing independent non-executive director, Mr Leslie Mkhabela, was appointed as the lead independent director from 31 January 2025. The board approved the separation of the audit and risk committee into a separate audit committee and risk committee in February 2025 to enhance oversight and accountability by bringing greater focus to the distinct responsibilities of these disciplines. The audit committee retains the same membership as the original audit and risk committee whilst the risk committee comprises five non-executive and two executive directors. The terms of reference of the separate committees were approved on 30 May 2025. Membership of the governance and strategy committee comprises the chairs of each of the board committees. Dr TL Mthombeni who is serving as chair of the risk committee was appointed as a member of the governance and strategy committee effective from 25 February 2025. The new Exco structure that was effective from May 2024 has been fully capacitated to address the prevailing business challenges and future-proof the organisation to enable growth and long-term sustainability. Changes to Exco include the following: Executive committee members Comment ML Bala Acted as group executive: human resources from 24 June 2024 until 28 February 2025 in addition to his role as group executive: distribution. Seconded to the role of interim chief executive officer at NTCSA effective from 1 August 2025 and is currently an invitee to Exco. FS Burn Resigned as member of Exco on 31 October 2024 with the appointment of the chief technology and information officer effective from 1 November 2024. RA Crookes Appointed as group executive: group capital effective from 1 November 2024. NY Hadebe Appointed as group executive: strategy and sustainability effective from 1 November 2024. C Hartley Appointed as chief people officer effective from 1 March 2025. A Mlambo Appointed as acting group executive: distribution effective from 1 August 2025. PB Mngomezulu Appointed as group executive: corporate services effective from 1 November 2024. The role incorporates procurement, legal as well as communications and stakeholder management functions. SJ Mthembu Appointed as head of legal and compliance effective from 1 May 2024. Resigned as member of Exco on 31 October 2024 with the appointment of the group executive corporate services on 1 November 2024 and is currently a permanent invitee to Exco. RP Mnisi Appointed as group executive: renewables effective from 1 February 2025. EM Pule Retired as group executive: human resources effective from 31 July 2024. J Sankar Resigned as member of Exco on 31 October 2024 with the appointment of the group executive: corporate services on 1 November 2024. SM Scheppers Appointed as member of Exco in the role of transmission divisional executive effective from 1 June 2023 until 30 June 2024. Served as interim chief executive officer of NTCSA effective from 1 July 2024 and invitee to Exco until his secondment ended on 31 July 2025. ABC 12 Executive committee members Comment AE Seema Appointed as group executive: strategic delivery unit effective from 1 December 2024. NN Sithole Acted as group executive: government and regulatory affairs effective from 10 August 2023 until 31 October 2024 with the appointment of the group executive: corporate services on 1 November 2024. V Tuku Fixed-term contract as group executive: transformation management office ended 30 June 2024. The position was removed from the organisational structure. HS Vezi Acted as group executive: legal and compliance from 1 April 2024 until 30 April 2024. LM de Villiers Appointed on a three-year fixed-term contract as chief technology and information officer effective from 1 November 2024. The end of the term of the board was extended from 30 September 2025 to November 2025. The board played a key role in addressing several systemic challenges that affected the operations, finances and sustainability of Eskom over the three years. Key developments and contributions made by the board in improving performance as well as steering Eskom towards stability and growth over the term of the board are discussed in more detail in “Reflecting on the Board’s performance” in the integrated report. Refer to pages 15 and 54 of the integrated report for more information. Human resources Workforce The creation of a high-performance ethical culture with a multi-skilled, capable, efficient, flexible and innovative workforce that supports a transformed Eskom is crucial as it adapts to the evolving energy market and the changing world of work. The group continues to make progress on implementation of the workforce plan that is aimed at ensuring that current and future staffing levels are aligned to the strategic objectives of the organisation with the focus on retaining core and critical skills, driving employment equity transformation targets and meeting training and development needs. The group headcount increased by 1 405 to 42 030 (2024: 40 625) employees at year end mainly because of the appointment of core and critical skills within generation and Eskom Rotek Industries (ERI). The group headcount includes 612 learners under the Youth Employment Services programme of government. Gross attrition rate was 5.9% (2024: 5.7%) with 2 436 employees that exited during the year. A total of 3 841 employees were appointed from the external market and 3 106 current employees were either promoted or internally transferred to advance current employees. Industrial relations A collective agreement was reached with trade unions that covers the salaries and other benefits of all bargaining unit employees for a period of three years. The agreement includes a 7% salary increase per year applicable from 1 July 2023 to 30 June 2026, a 7% increase in the housing allowance per year over the three-year period and a once-off taxable payment of R10 000 for the first two years. Salary adjustments were implemented from 1 October 2024 for managerial employees. The increase resulted in a 7% increase in managerial remuneration costs of which a 3% cost of living adjustment was guaranteed for all managerial employees and the remaining 4% was available for managers to use at their discretion to award employees based on performance, correcting income differentials and retaining high performers. Monthly production bonuses were also awarded during the year to eligible employees for improving operational performance based on daily targets. The long-term performance incentive scheme rewards eligible Exco members in cash for meeting organisational objectives measured over a three-year period. The performance awards are linked to gatekeeper conditions and key performance indicators (KPIs) that are aligned with the Eskom Corporate Plan as well as shareholder compact and include both financial and non-financial targets. Performance awards were granted in 2024 (grant 13) and 2025 (grant 14) effective from 1 April 2023 and 1 April 2024 respectively. Refer to note 49 and the integrated report. The annual STI scheme was reimplemented in 2025 and is based on performance of the organisation and employees. The objective is to improve productivity, financial performance and encourage a high-performance culture. The initiative is self-funded through enhanced profitability and liquidity, focusing on operational key performance areas across the organisation. A once-off mid-year pay-out was made to employees in December 2024. A provision was raised for the remaining pay-out for the full year which was paid in September 2025 after conclusion of the year end audit and verification of the level of achievement of year end targets at an organisational level. Building and retaining strong skills Eskom continues to monitor skills trends across the organisation and implement initiatives to build critical skills with the capacity to innovate and address the technical skills gap. Divisions and subsidiaries have been encouraged to reintroduce divisional learning committees and prioritise future-focused training interventions. The total learner pipeline represented 8.0% (2024: 5.9%) of the permanent Eskom company workforce against a target of 2.5% with technical learners (artisans, engineers, plant operators and technicians) making up around 25.0% of the total pipeline. There were 2 609 (2024: 2 086) learners at year end representing a 25.1% growth in learner numbers. Critical roles most at risk of knowledge loss have been proactively identified as a sizeable portion of the experienced workforce approaches retirement in the next five years with structured knowledge transfer initiatives being implemented. These include digital platforms, mentorship programmes and succession planning frameworks designed to capture institutional expertise and ensure continuity of operations. Interventions across several proficiencies are being prioritised including technical and plant knowledge, business acumen and financial literacy, leadership and management capabilities and understanding the broader energy industry and associated regulations based on the results of the skills audit concluded in October 2022. Continuous monitoring and progress feedback on closing skills gaps identified are in place. The Eskom Academy of Learning is being repositioned to address competency gaps and support future-readiness by delivering streamlined, high-impact learning solutions. A leadership development unit was established within the Eskom Academy of Learning to enhance leadership capabilities and strengthen the leadership pipeline through succession planning and talent management programmes. ABC 13 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Human resources (continued) Improving internal transformation Ensuring a diverse and inclusive workforce and promoting the interests of designated groups remains a key area of commitment. The racial equity targets for the year were met but gender equity at top and senior management, skilled and semi-skilled levels require improvement. The overall gender ratio improved to 63% male and 37% female (2024: 64% male and 36% female) with a goal of achieving 50:50 gender parity by 2030. Female representation at Exco level remains a priority with three of the 11 members being women. Group disability equity improved to 3.1% (2024: 3.0%) with the number of employees with disabilities increasing to 1 308 (2024: 1 201). The group met and exceeded the national target of 2.0% but still falls short compared to the group target of 3.2%. There is continual focus on efforts to enhance awareness and accessibility such as training, deployment and use of virtual platforms as well as provision of tailored physical equipment for persons with disabilities. Of concern is that employees with disabilities are mostly represented in the lower job categories. Eskom is committed to investing in employee development to ensure that employees are equipped to meet the evolving demands of the transforming energy sector. A total of 930 (2024: 930) employees were enrolled in further studies during the year of which 651 (2024: 549) were female and 30 (2024: 31) were employees with disabilities pursuing qualifications ranging from certificates to doctorates, with more than 70% working toward a bachelor’s degree or higher. Refer to page 120 of the integrated report for more information. Shareholder compact performance The table below sets out Eskom’s performance measured against the shareholder compact that was subject to audit by the external auditors. The external audit opinion relating to this audit is detailed on page 31. All the KPIs in the compact refer to the Eskom group, except where specifically indicated. Actual performance against the year end target is indicated as follows: Actual performance for the year met or exceeded the target Actual performance for the year did not meet the target Key performance indicator Ref Unit Target Actual Actual 2025 2025 2024 Generation Energy availability factor (EAF) (a) % 65.00 60.60 54.56 Planned capability loss factor (PCLF)1 % 10.50 12.76 12.04 Relative particulate emissions (b) kg/MWh sent out 0.30 0.64 0.79 Specific water consumption (c) ℓ/kWh sent out 1.37 1.40 1.43 Atmospheric emission licences compliance (d) % 90.00 85.62 80.20 Coal purchase rand/ton increase % 10.00 2.90 6.64 Generation capacity installed and commissioned (commercial operation) (e) MW 800 799 – Just Energy Transition Assembly of containerised microgrids at Komati1 (f ) number 30 13 n/a Construction of the climate-smart horticulture facility at Grootvlei1 (g) % 100.00 79.64 n/a Transmission System minutes lost <1 (h) minutes 3.53 4.37 3.29 Transmission lines installed km 286.0 292.6 74.4 Transmission transformer capacity installed and commissioned MVA 2 380 2 620 23 Distribution Payment levels (i) % 94.00 93.86 94.91 Distribution total energy losses (j) % 9.65 10.42 9.92 System average interruption duration index (SAIDI) hours 38.00 34.91 34.88 Finance EBITDA R million 67 120 99 038 43 410 Cash interest cover ratio 1.92 2.76 1.18 Debt service cover ratio 0.76 1.11 0.46 Savings from turnaround initiatives R billion 5.4 16.3 9.9 Human resources Training spend as % of actual gross employee benefit expense3, 4 % 3.75 4.26 4.19 New learner enrolment 2, 5 number 290 952 806 Risk and sustainability Lost-time injury rate (employee) rate 0.30 0.23 0.29 Corporate social investment (CSI) CSI committed spend R million 146.10 146.20 93.10 Fraud and corruption Assessment of whistle-blower reports completed within 21 working % 70.00 93.40 n/a days of being registered1, 6 Investigations that commenced within 60 calendar days of the (k) % 70.00 12.24 n/a preliminary assessment report being completed1, 7 Cases where recommendations emanating from forensic investigations (l) % 70.00 42.68 n/a have been fully implemented1, 8 Board members’ and employees’ security clearance assessments (m) % 70.00 19.15 n/a conducted in line with Risk and Integrity Management Framework (RIMF) requirements1, 9 Employees (existing and new recruits) whose background checks have % 60.00 95.41 n/a been conducted in line with RIMF requirements1, 10 ABC 14 Key performance indicator Ref Unit Target Actual Actual 2025 2025 2024 Research, testing and development Research and development % of NERSA-allocated spend 95.00 102.70 91.00 Information technology Blockchain adoption rate (n) % 40.00 20.00 20.00 Legal separation Distribution legal separation (corporatisation) – Distribution is a legal (o) date 30 June No n/a operating subsidiary of Eskom11 2024 Procurement and supply chain management Preferential procurement % of total measurable 80.00 93.21 75.55 procurement spend (TMPS) Local content 3 % 80.00 85.83 60.34 B-BBEE score3 number 4 3 3 Enterprise development 2 R million 5.00 6.98 6.12 Supplier development 2 R billion 6.00 12.29 8.31 National industrial participation programme2 % 100.00 100.00 100.00 The reasons for the targets that were not achieved are discussed below: Ref Key performance indicator Target Actual Reason 2025 2025 Generation (a) EAF 65.00 60.60 EAF was negatively affected by high levels of unplanned losses as well as planned maintenance to address plant performance as part of the Generation Recovery Plan. Long duration full load losses (>30 days) at Ankerlig unit 12, Arnot unit 2, Hendrina unit 2, Hendrina unit 7, Matla unit 6 and Matimba unit 2 as well as delays in the steam generator replacement outage at Koeberg unit 2 contributed to unplanned losses for the year. Substandard contractor performance resulted in delays in returning some units on planned maintenance, thereby further impacting unplanned losses. Extreme weather conditions also resulted in multiple unit shutdowns at Camden, Lethabo and Kusile power stations as well as excessive partial load losses. The energy sent out by Koeberg power station improved during the year and contributed positively on EAF performance compared to the prior year because the efficiency at Koeberg unit 1 increased after the replacement of the steam generator. The increase from 12.04% in 2024 to 12.76% in 2025 for PCLF reflects positively on the reduction of planned maintenance backlogs but contributes negatively to energy availability. (b) Relative particulate emissions 0.30 0.64 The target has not been met even though the relative particulate emission performance improved significantly from the previous year. Performance was negatively affected by ash plant challenges, dust handling plant malfunctions as well as sulphur trioxide plant breakdowns which negatively impacted the efficiency of electrostatic precipitators that limit particulate emissions. Eight out of 14 power stations frequently exceeded their particulate matter emission limits. (c) Specific water consumption 1.37 1.40 Water performance was negatively affected by low load factors at several wet-cooled power stations (Hendrina, Kriel, Tutuka, Duvha and Arnot), high demineralised water consumption associated with unit trips as well as poor water management practices at power stations, including high raw water usage and dam overflows. Fixing leaks during opportunity maintenance and outages, dredging dams, preventing excessive ash going into the dams as well as ensuring availability of pumps to recover water for reuse continued to be focus areas. 1. New measure included in the 2025 shareholder compact. The prior year actual is reported as not applicable where no comparative is available. 2. Measure consists of Eskom company and NTCSA. 3. Measure consists of Eskom company only. 4. The definition in the 2025 shareholder compact measures training spend as a percentage of actual gross employee benefit expense. The comparative figure is based on the 2024 shareholder compact definition which measured training spend as a percentage of budgeted gross employee benefit expense. 5. The 2024 shareholder compact included four separate measures for the intake of learner artisans, engineers, technicians and sector specific learners. The 2025 shareholder compact includes a single measure for combined learner intake. The comparative figure therefore reflects the combined value of the four learner intake measures reported in the prior year. 6. Measured on assessment of incidents recorded from 1 April 2024. This KPI is measured on cases recorded within the case management system as managed by the group investigations and security department. 7. Measured on investigations referred from 1 April 2024 in cases where preliminary assessments recommend a full forensic investigation. 8. Measured on forensic reports issued from 1 April 2024 based on the percentage of disciplinary referrals that have been tabled with the presiding officer of the disciplinary hearing within 90 calendar days. 9. Measured on security clearance applications as well as accompanying documents submitted to Eskom’s vetting unit and subsequently captured on the State Security Agency’s system for assessment. This KPI measures the number of applications in progress with the State Security Agency and does not indicate the final clearance status for those employees. 10. Measured on accompanying documents submitted and background checks conducted as part of Eskom’s human resources recruitment process by an independent service provider. 11. The definition of legal separation in the 2025 shareholder compact was based on corporatisation of distribution which refers to the signing of the merger agreement for NEDCSA. The legal separation of transmission which was included in the 2024 shareholder compact was achieved when NTCSA commenced trading from 1 July 2024. ABC 15 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Directors’ report continued Shareholder compact performance (continued) Ref Key performance indicator Target Actual Reason 2025 2025 Generation (d) Atmospheric emission licences 90.00 85.62 Compliance is scored based on average emission limit compliance, number of compliance emergency incidents reported to authorities in terms of section 30 of the National Environmental Management Act, 107 of 1998 (NEMA), emission monitor test validity, gaseous monitor reliability and general atmospheric emission licence compliance based on internal reviews and assessments completed. Performance was negatively affected by power stations operating in non-compliance with average monthly emission limits, monitor test invalidity as well as gaseous monitor unreliability. (e) Generation capacity installed and 800 799 The target for commercial operation of Kusile unit 5 was carried forward from the commissioned (commercial 2024 shareholder compact to 2025 due to the significant schedule delays arising from operation) the gas air heater incident in September 2022. Commercial operation was successfully achieved for Kusile unit 5 on 30 June 2024, thereby connecting 799MW to the grid. The unit is considered to have been delivered in line with the shareholder compact expectation despite the final rated capacity of the unit being 1MW lower than planned. Just Energy Transition (f ) Assembly of containerised 30 13 Construction of 13 containerised microgrid units, which commenced in 2024, was microgrids at Komati concluded in May 2024 against a target of 30 units, due to limited orders and delays in securing planned funding from Department of Electricity and Energy. There was insufficient time to complete the assembly and fabrication of the remaining units by year end after internal funding was obtained in February 2025 to manufacture additional units. There were no containers in fabrication by year end. The strategy was revised and stakeholders were engaged. Eskom secured commitments for the offtake of an additional 43 units during 2026. (g) Construction of the climate-smart 100.00 79.64 Significant development work was concluded during the year, including identifying and horticulture facility at Grootvlei ringfencing of land, finalising funding and partnership arrangements, obtaining environmental approvals, concluding designs and appointing contractors for civil work and fencing. Construction of the facility commenced in November 2024. Construction was subsequently halted in early December 2024 to facilitate for further engagement with business forums as well as local and provincial government. Work recommenced in January 2025 but heavy rains affected the construction with the site remaining waterlogged and inaccessible until year end. Expenditures incurred during the year related to fencing, the greenhouse and transformer. Construction is scheduled for completion in 2026 with the facility expected to become operational by 31 March 2026. The necessary training will be done simultaneously. Transmission (h) System minutes lost <1 3.53 4.37 Performance was negatively impacted by several equipment failures at substations and commissioning errors resulting in trips as well as increased veld fire-related incidents that resulted in transmission line faults. Distribution (i) Payment levels 94.00 93.86 Performance was negatively affected by the significant growth in arrear metro debt during the year. While payment levels of non-municipal sectors performed well above target, the recent challenges with several Gauteng metros have contributed significantly to the decline in payment levels of the municipal sector, adversely affecting overall payment levels. (j) Distribution total energy losses 9.65 10.42 Non-technical losses resulted largely from electricity theft due to illegal connections, meter tampering and illegal vending. Technical losses were impacted by ageing distribution networks which are constrained, overloaded and exposed to equipment theft. ABC 16 Ref Key performance indicator Target Actual Reason 2025 2025 Fraud and corruption (k) Investigations that commenced 70.00 12.24 Performance was negatively affected by the backlog of forensic cases. Most forensic within 60 calendar days of the investigations conducted during the year related to cases which were registered preliminary assessment report between 2021 to 2023. Investigations had therefore not yet commenced on most being completed cases referred since 1 April 2024. The forensic function is focusing on clearing the backlog by prioritising high-impact investigations and considering the ageing of cases. (l) Cases where recommendations 70.00 42.68 Performance was negatively affected by the focus on addressing and finalising emanating from forensic recommendations relating to priority matters and matters from prior years as well as investigations have been fully cases where the 90-day period applied in the measure had not elapsed by year end. implemented (m) Board members’ and employees’ 70.00 19.15 Performance was negatively affected by resource constraints due to the high volumes security clearance assessments of security vetting applications received. These resource constraints also led to delays conducted in line with RIMF in complying with the new requirement from October 2024 to first capture all requirements applications on the system of the State Security Agency, thereby delaying the submission of security vetting applications. Information technology (n) Blockchain adoption rate 40.00 20.00 Performance was negatively affected by delays in acquiring a digital procurement solution due to the requirement for data to be hosted and processed locally as well as revisions to the procurement strategy. Eskom investigated the implementation of blockchain technology for the detection and prevention of fraud in the supply chain system in line with the shareholder’s expectations. Despite some areas being identified where blockchain technology could be applied, none were directly related to the detection and prevention of fraud in supply chain systems. Eskom proposed a new measure in the 2026 shareholder compact for the rate of digitalising procurement management processes which will not be limited to blockchain technology. Legal separation (o) Distribution legal separation 30 June No The legal separation progress to date has provided key insights into risks and (corporatisation) – Distribution is 2024 dependencies which affect the timelines and future direction of the legal separation a legal operating subsidiary of programme. The separation of distribution has been delayed by the escalation in Eskom municipal arrear debt which affects the liquidity and solvency assessment of NEDCSA and its financial sustainability. A comprehensive approach is underway to create solutions to improve the financial position of distribution. Reportable irregularities The action plans to address reportable irregularities raised in previous years remained a focus area. It is acknowledged that specific matters will reoccur and remain open until all related aspects are concluded as it takes time to resolve these matters because of the inherent nature thereof, such as environmental regulatory compliance. Detailed progress on reportable irregularities can be found in note 52. Events after the reporting date Events after the reporting date are discussed in note 48. Approval The group annual financial statements for the year ended 31 March 2025 were prepared under the supervision of the group chief financial officer, C Cassim CA(SA), and approved by the board and signed on its behalf by: M Nyati DL Marokane C Cassim Chairman Group chief executive Group chief financial officer 29 September 2025 29 September 2025 29 September 2025 ABC 17 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Report of the audit committee The audit committee (the committee) (formerly the audit and risk committee) presents its report in terms of the requirements of the Public Finance Management Act, 1 of 1999 (PFMA), the Companies Act (section 94(7)(f )) and other applicable regulatory requirements as well as in accordance with the King IV TM for the financial year ended 31 March 2025. Mandate and terms of reference This report covers the oversight activities of the audit and risk committee that was in place until February 2025 and the separate audit committee since then until the date of finalising the annual financial statements. The separation of the audit and risk committee into separate committees for audit and risk was approved by the board in February 2025 to enhance oversight and accountability with greater focus on the distinct responsibilities of the committees and alignment with governance best practice. The membership of the former audit and risk committee was retained for the audit committee. The role of the audit and risk committee was defined in its mandate. It covered, among others, its statutory duties and assistance to the board with the oversight of financial and non-financial reporting and disclosure, internal control systems, risk management, compliance with legal and regulatory provisions, forensics, internal and external audit functions as well as combined assurance including technology and information governance. The terms of reference of the separate committees were approved on 30 May 2025. The audit committee provides oversight over financial management, reporting and disclosure, internal control and the internal and external audit functions whilst the risk committee provides oversight over the enterprise risk management system ensuring that material risks that could affect the group are identified, evaluated, effectively managed and reported. The role of the audit committee is to assist the board with its responsibility for the governance of risk related to financial reporting including market, financial, liquidity and operational risks that could result in financial loss. The audit committee (as well as the audit and risk committee) adopted appropriate formal terms of reference as its charter, regulated its affairs in compliance with this charter and discharged all its responsibilities contained therein. Information about the mandate, membership composition and attendance of meetings of the audit committee is set out in the 2025 integrated report under the leveraging governance for transformation section. Execution of functions The committee considered information, insights and explanations provided by management, management's experts, the internal audit and forensic departments as well as had discussions with the independent external auditors. The committee encouraged rigorous challenging of internal control, accounting, disclosure matters and compliance to legislation in carrying out its functions and to conclude on key issues during the year. A combined assurance model is applied by the group to ensure coordinated assurance activities. The committee oversees the assurance activities and the establishment and maintenance of effective systems of internal control which aim to provide reasonable assurance that the group’s financial and non-financial objectives are achieved and that the preparation of the group’s suite of externally published reports (as detailed in the integrated report) are in accordance with the frameworks and standards set out within those reports. External audit The committee is responsible for recommending the appointment of external auditors as well as overseeing the external audit process and considered, inter alia, the following in the conduct of its duties: • Appointment of the external auditors in terms of the Companies Act (tabled at the annual general meeting for approval), Johannesburg Stock Exchange Debt and Specialist Securities Listings’ Requirements and other applicable legal and regulatory requirements. • Quality and effectiveness of the external audit as well as the independence and objectivity of the external auditors, including the tenure of the audit firm and the rotation of the engagement partner. Deloitte & Touche was appointed as external auditors from 2022 with Mr AJ Dennis as the lead engagement partner for the 2022 to 2025 financial years. • Decision letters, findings and remedial explanations issued by the Independent Regulatory Board for Auditors as well as any summaries and explanations made available by the external auditors to the committee. • External audit plan, external audit fees (budget and actual) and terms of engagement of the external auditors, including adherence to the practice of not allowing the external auditors to provide non-audit services (unless pre-approved by the committee) to ensure the independence and objectivity of the external auditors. The actual audit fees (audit of financial statements and related assurance work - refer to note 37) were higher than anticipated because of increased audit work needed to address additional risks and further breakdown in controls identified. • Feedback on the outcome of the external audit including the qualification and material findings raised in the audit opinion, reportable irregularities, accounting, sustainability and auditing concerns identified as well as recommendations for improvement. • Feedback from the Auditor-General of South Africa (AGSA) resulting from their oversight of the external audit process including reviews of audit work on identified risk areas and understanding of the group to identify good practises for improved governance, accountability and building of public confidence in Eskom. The committee acknowledged that significant shortcomings, in particular internal control deficiencies, were identified by the external auditors and the AGSA. The audit recovery programme which aims to build finance capacity and capability, strengthen internal controls and track progress against audit findings (internal and external) will result in better audit outcomes over the next three years. The key objective of the audit recovery programme will improve the PFMA control environment in future years, although it will not address all the historical deficiencies. The committee is satisfied with the independence and objectivity of the external auditors having considered the matters set out in section 94(8) of the Companies Act as well as the quality and effectiveness of the external audit. Internal audit The committee is responsible for overseeing the internal audit function, that reports functionally to the committee, and considered, inter alia, the following in the conduct of its duties: • Internal audit charter, three-year rolling internal audit plan, independence and performance of the internal audit department. • Cooperation and coordination by internal audit with external auditors. • Risk-based internal audit plan that was augmented to incorporate internal assurance on initiatives by management to address external audit findings and proactive assurance on any internal reports requiring board approval. • Expertise, resources and experience of the internal audit department, including the chief audit executive. • Feedback on the outcome of internal audit reviews including shortcomings in internal controls, risks and governance. • Status of corrective action taken by management in response to significant internal audit findings. • Readiness and impact on internal audit in terms of the Global Internal Audit Standards 2024 (effective from January 2025) which was formally adopted by internal audit on 1 April 2025. ABC 18 • External quality assessment in accordance with International Standards for the Professional Practice of Internal Auditing of the internal audit function, finalised in June 2025, that confirmed the highest level of conformance. This outcome affirms the function’s effectiveness, independence and alignment with global internal audit practices. The committee is satisfied that the internal audit function carried out the responsibilities in its mandate and noted that there are areas of improvement within the function which the committee will continue to monitor for improvement. There remains a need to fill key vacancies and acquire additional resources and expertise, including future fit specialist skills to enhance the value that this function adds to the group. Internal control including information technology, governance and management of risks Internal control The committee assists the board with the oversight of the internal control system and implemented processes to actively oversee, consider and monitor, inter alia, the following in the conduct of its duties: • Continuing control deficiencies as identified by internal combined assurance activities, the external auditors and other external assurance providers. • Assessment by assurance providers of the effectiveness of adherence to policies, process control manuals and procedures by the business which revealed a significant lack of management oversight. Areas impacted include management of contracts, supply chain, operational and capital projects, inventory, sustainability indicators and plant, as well as legal, regulatory and compliance processes. There were also identified inadequacies in general and security controls in the information technology and operational technology environments. • Continuing breakdown in internal controls over financial reporting including inadequate review and insufficient monitoring of financial and reporting processes at component level. • Significant risk areas and their associated remediation plans and mitigating controls implemented. • Ongoing improvements to the control environment that are being implemented where control deficiencies were identified, including enhancing the culture of adherence to established policies and procedures, the work ethic and accountability of employees as well as focusing on strengthening financial control and reporting at component level. The effectiveness of the internal control environment is largely dependent on the commitment of employees to consistently apply and maintain these controls. • Ongoing enhancements of automated systems to minimise manual intervention in the procurement of goods and services to improve internal controls. • Progress on findings raised by internal and external assurance service providers including management’s assessment of the root causes, immediate actions taken to ensure matters progress satisfactorily, consequence management of employees and suppliers as well as recommendations to avoid recurrence. The committee acknowledged the effort by management to remedy identified weaknesses and improvement made in certain areas but is concerned that the internal control environment has not improved significantly and that matters are not addressed at the rate required to reduce the risk exposure to the business. The committee continued to place higher reliance on external assurance providers as the internal environment requires significant improvement. The committee acknowledged that the design of the internal control system is generally adequate and provides a structured framework to support governance, risk management and operational efficiency. The effective application of controls, however, requires ongoing improvement from management. The combined assurance model requires enhancement in the internal monitoring and assessment of the execution of controls to proactively address the circumvention of controls, prevent recurrence of findings and improve the functioning of business processes. The committee noted the progress made by management in strengthening the process control and assurance function. Additional resources have been recruited within group finance as part of the audit recovery programme to enhance process control and assurance capabilities to improve the monitoring of adherence to policies, process control manuals and procedures and at reinforcing the effectiveness of the internal control environment. The committee concluded that the compensating measures in place to combat any identified breakdown in the internal accounting controls to ensure that the financial records may be relied upon for the preparation of the financial statements and accountability for assets and liabilities are maintained. Necessary enhancements are however required to ensure the controls operate effectively. Governance The committee is responsible for assisting the board in strengthening corporate governance practices and considered, inter alia, the following in the conduct of its duties: • Compliance of employees, contractors, directors and service providers with Eskom ethics policies and procedures. • Recommended and provided oversight on combining of the security and forensic functions of Eskom into the group investigations and security division to carry out all investigative matters. The general manager investigations and security was appointed in October 2024 and a rapid response unit was established within the group investigations and security division to accelerate the timeframes of investigations. The backlog of outstanding forensics cases are being expedited through a dedicated project management office. • Effectiveness of governance processes, status and action taken by the group investigations and security division relating to internal and external investigations involving fraud, theft, financial irregularities and misconduct. • Reportable irregularities raised by the external auditors, the actions taken to address reportable irregularities raised in the prior year as well as measures taken to prevent any reoccurrence thereof. The committee acknowledged that certain reportable irregularities will reoccur and remain open until all related aspects have been concluded as it takes time to resolve these matters because of the inherent nature thereof such as environmental regulatory compliance. The commitee shared details of reportable irregularities that impact areas of oversight of other committees to ensure that the relevant committees monitor progress of the implementation of interventions within their mandate. Refer to note 52. • The restructured strategic leadership with a new Exco structure announced in May 2024 has been fully capacitated to address the prevailing business challenges and future-proof the organisation to enable growth and long-term sustainability. • Progress made by the supplier review and executive tendering committees in verifying supplier information, evaluating potential risks as well as expediting resolution of reported suspected fraudulent conduct referred to them. • Assessment of the application of practices and principles of the King IV TM report on corporate governance for South Africa. The governance framework of Eskom remains an area for improvement with compliance with key laws and regulations requiring attention, particularly compliance with the PFMA. Despite the various initiatives, consequence management also remains a focus area for improvement to address instances of non- compliance by employees and suppliers to generally well-documented policies, process control manuals and procedures. While progress has been made in the implementation of consequence management, Eskom is still dependent on law enforcement agencies and the justice system to timeously execute on arrests and convictions. The committee acknowledged Eskom’s overall assessment of the implementation of the King IV TM principles and practices. Initiatives are underway to address focus areas where some of the principles have not been fully or effectively applied. ABC 19 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Report of the audit committee continued Execution of functions (continued) Internal control including information technology, governance and management of risks (continued) Management of risks The committee assists the board with its responsibility for the governance of risk relating to financial reporting and considered, inter alia, the following in the conduct of its duties: • Effectiveness of the system and process of risk management including the process of identifying significant risks and resulting mitigation strategies. • Risks and internal controls relating to financial reporting, including risks arising from fraud, information technology and operational technology as well as legal and regulatory compliance. Information technology and operational technology related to financial reporting The committee is responsible for ensuring that risks related to information technology and operational technology are adequately managed, dealt with and considered, inter alia, the following in the conduct of its duties: • Effectiveness of the information technology and operational technology systems and processes of risk management relating to financial reporting, internal control and security including the appointment of the group information and technology officer that resulted in a more dedicated focus on these environments. • Feedback on the progress made by the SAP war room that was set up to investigate and oversee the implementation of corrective and enhanced preventative measures because of the breakdown in the control environment after an internal breach in the SAP system by an employee (no financial loss incurred). A consequence management process is in progress. The external auditors needed to perform additional substantive audit procedures as the control breakdown limited their ability to place reliance on the general SAP IT controls. • Enhancements made to endpoint security protection with improved software aimed at detecting advanced cyber threats to address limitations and vulnerabilities of legacy endpoint security technology. Due to the incompatibility of certain outdated and unsupported operating technology systems to the new endpoint security and the legislative hurdle of data storage outside South Africa, some business components did not transition to the new endpoint security. This was subsequently addressed as a priority with improved detection tools that added greater levels of security. • Progress by the online vending system war room on the investigation, interventions, control enhancements and measures to reduce and mitigate the growth of illicit prepaid electricity token creation. The committee noted that the measures to strengthen the online vending environment are ongoing and were not yet completely effective at the date of this report. Refer to non-technical energy losses in the directors’ report. The committee acknowledged that the financial risk to the company relating to unused illicit prepaid electricity tokens cannot be quantified. Refer to note 45.2. Based on investigations completed to date, consequence management was taken on employees found guilty. However, the scope of investigations has been extended and is ongoing. The committee recommended that a two-pronged approach consisting of accelerating rollout of smart meters and acquiring new software for prepaid token creation is followed by management to eliminate the current online vending system fraud incorporating the lessons learnt to ensure robust controls are in place around access and configuration management, backups and reconciliations. Other related risks, including the role Eskom played in managing encryption of keys for vending, were mitigated by transitioning the responsibility of the key management center back to the Standard Transfer Specification Association. The over reliance on and overconcentration of a single external entity in the value chain of the online vending environment is being addressed. • System enhancements were implemented to reduce risks integral to the procurement and financial systems including, amongst others, automation of both invoice processing and vendor reconciliations. • Improvements and action plans implemented in the management of the data centre to address shortcomings including access control. The committee acknowledged that the information technology and operational technology control environments are theoretically adequate but in practise susceptible to internal circumvention, which could potentially lead to misstatements during financial reporting and financial loss if undetected. Ongoing oversight and understanding of the information and operational technology landscapes, including, outdated operational technology, cyber security, logging and retention of data and management of contractors and service providers continues to be a key focus area for improvement. Fraud risks relating to financial reporting including crime and corruption The committee is responsible for monitoring the status and action taken on addressing key matters arising from allegations of criminality in the form of crime, fraud and corruption, theft and sabotage and the investigations thereof and considered, inter alia, the following in the conduct of its duties: • Fraud prevention plan and actions taken to prevent, detect, respond to and mitigate the risk of crime, fraud and corruption. • Updates on investigations being conducted internally by the SIU as well as other specialist service providers. • Progress by the state capture task team in implementing plans to address the recommendations from the Zondo Commission report. • Use of data analytics to identify transactions and anomalies that should be investigated for potential crime, fraud and corruption, as well as non-compliance with specific policies. A service provider was appointed to assist with this process and to build this capability within the company. Robust controls are being developed to address and prevent the findings identified. The committee noted that the enhancement of systems, controls, resources, reporting structures, policies and procedures and consequence management remains key focus areas for improvement to address instances of crime, fraud and corruption. The committee acknowledged the progress made in forensic investigations, legal matters and other internal and external investigations into allegations of crime, fraud and corruption. The committee concluded that the system and process of risk management related to financial reporting and internal financial reporting controls, including the risk of crime, fraud and corruption, is adequate even though the effectiveness thereof needs to be improved. Compliance with legal and regulatory requirements The committee monitors and reviews the compliance of the group with legal and regulatory requirements and considered, inter alia, the following in the conduct of its duties: • Legal and regulatory requirements, in particular PFMA and Companies Act compliance relating to financial reporting. • Legal matters that could have a material impact on the group. • Ongoing audit qualification regarding the completeness and accuracy of certain financial records in terms of the requirements of the PFMA and Companies Act that continued in 2025 and the impact thereof on the audit opinion. • Implementation and progress of the audit recovery programme including addressing non-compliance with the PFMA through corrective measures, compliance monitoring and closure of existing audit findings. The committee noted that the system of control related to compliance is partially effective as issues have been identified that may pose challenges to the achievement of business objectives and long-term sustainability of the organisation if not addressed timeously. ABC 20 The committee noted that the audit qualification regarding the PFMA records that were not complete or accurately maintained in line with legislative requirements relating to irregular expenditure and losses due to criminal conduct continued in 2025. Fruitless and wasteful expenditure was not qualified in the current year. The committee emphasised the continued need to place significant focus on addressing the shortcomings in the accuracy and completeness of information required by the PFMA and acknowledged that there are still significant internal control deficiencies in the PFMA reporting process. The committee acknowledged that reporting structures, systems, controls, resources, policies and procedures continued to be enhanced to address the challenges. The committee concluded that the compliance framework requires greater focus to ensure adequate application thereof, especially in terms of PFMA requirements and contract management. The committee acknowledged the progress made to improve compliance with PFMA and other issues identified by the external audit but that the intended improvement will only be observed in the longer term. Oversight of financial and non-financial reporting and disclosure The committee is responsible for providing oversight on financial management, reporting and disclosure and considered, inter alia, the following in the conduct of its duties: • Appropriateness of the expertise and experience of the group chief financial officer as well as the expertise, resources and experience of the finance function. • Matters relating to liquidity, cost savings, budgeting and forecasting, future funding and taxation in relation to the going-concern assumption for the group. • Integrity of the information reported in the integrated report and disclosure of non-financial issues, including sustainability and PFMA related information, to ensure that it is reliable and does not conflict with the financial information in the annual financial statements. • Adequacy, reliability and accuracy of financial information provided to users of such information. The following significant matters relating to the annual financial statements which continue to be key focus areas for monitoring and reporting were considered: Significant Consideration matter Going-concern The committee continued to monitor the liquidity and solvency of the group and company closely because of the financial position and assessment related challenges and concluded that it was not trading recklessly at any time during the year. The committee acknowledged the continued support from government including the debt relief arrangement and adherence to the conditions as well as the strengthening of the financial sustainability and liquidity of the group because of the debt relief arrangement. The committee acknowledged that the group continues to face liquidity pressure due to long-term financial sustainability challenges arising from a lower than anticipated tariff path and structure, high debt service costs, above-inflationary cost increases, escalating arrear municipal and metro debt, operational inefficiencies, the impact of crime, fraud and corruption (including loss of revenue because of illegal electricity connections and illicit prepaid electricity tokens) and continued focus on addressing plant performance and expanding the transmission infrastructure for new generation sources. The committee noted that the debt relief is a temporary solution and acknowledged that the liquidity in the longer term after the debt relief period remains at risk given the financial and operational challenges of the group. These include the growth in overdue municipal and metro debt as well as the municipal debt relief arrangement that is yielding minimal results. Intervention by government is needed to address the root cause of this challenge. It is also imperative that the improved generation plant performance continues going forward. The going-concern assessment evaluated the liquidity of the group based on the latest cash flow forecasts including servicing of debt in the 12 months after the sign‑off of the annual financial statements and included stress-tested scenarios. The committee considered the key aspects, material uncertainties inherent in the events, conditions and assumptions that may cast significant doubt on the going concern of the group as well as the mitigation strategies and actions (aspects and considerations applicable to both group and company). The committee acknowledged, noted and considered the impact of, amongst others, the matters discussed in note 3.2 including the: • Improvement in the financial indicators of the group compared to the prior year, in particular the EBITDA, EBITDA margin, net debt service cover and cash interest cover indicators. • Significant improvement in net profit after tax because of increased revenue (tariff increase and higher sales volumes), decreased primary energy costs (improved plant performance, lower diesel prices, recovery of the fuel levy rebates from SARS) and derecognition of the deferred tax asset in the prior year. • Approval granted by the Minister of Finance in October 2024 to convert R8 billion and the remaining balance of R56 billion during June 2025 of the R64 billion debt relief support from government received during the year to equity. • Eskom Debt Relief Amendment Act, 5 of 2025, which reduced the total debt relief support from government from R254 billion to R230 billion due to the improved performance at Eskom as well as the delay in the sale of the EFC (the sale to African Bank Limited consists of the EFC loan book and interest in Nqaba referred to as the EFC disposal group). The amendment also replaced the initial takeover of Eskom debt (principal and future interest) of R70 billion with a loan of R40 billion in 2026 and R10 billion in 2029 that is convertible into equity subject to conditions being met. • Sale of the EFC disposal group continues to be prioritised and is expected to be concluded by 31 March 2026. Refer to note 23. • Total amount of R9.2 billion received from SARS by 31 March 2025 because of the resolution of the dispute between Eskom and SARS on 18 October 2024 relating to previously disallowed claims for fuel levy rebates. • Impact of the continuous increase in overdue electricity receivables mainly due to growing municipal arrear debt (including the impact of non-recoverability of long outstanding electricity receivables) and the municipal debt relief arrangement that is yielding minimal results with most of the municipalities failing to comply with the conditions. The municipal overdue debt is a key matter that must be resolved for the continuation of the legal separation of the distribution business. The committee acknowledged that there are various dependencies and uncertainties, both from the perspective of timing of interventions as well as whether the plans will materialise as anticipated to address the risks to manage the going concern. The committee concluded, after examining the forecast and stress-tested scenarios, that the going-concern basis of accounting was appropriate for Eskom company and group because of adequate access to resources and support from government in the form of the debt relief arrangement to continue their operations for the foreseeable future, supporting the going-concern assumption and to address the related material uncertainties. The committee recommended the adoption of the going-concern basis of preparation by the group and company to the board based on the critical factors as disclosed in note 3.2. ABC 21 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Report of the audit committee continued Significant Consideration matter Consideration of The committee considered the appropriateness of the CGUs for the group and that the Eskom company (generation and distribution cash generating segments), NTCSA (transmission segment) and ERI have been identified as a single CGU (referred to as the Eskom CGU) as it remains a unit (CGU) and regulated vertically integrated business and the segments across the electricity supply chain do not generate cash inflows independently. assessment of possible The committee acknowledged that the identification of the Eskom CGU may be impacted in the future by the planned legal separation impairment of generation and distribution into separate entities. The determination of the CGU could also change when the separate legal entities (or some of the legal entities in the vertically integrated electricity business) are fully operational in terms of their individual mandates with unregulated pricing structures for each licensee, alternative transmission (NTCSA) infrastructure exist and there is sufficient generation capacity to allow for a truly independent market structure. Refer to note 2.6. The committee noted that the sale and purchase of electricity and other services between the segments in the vertically integrated electricity business is recognised in accordance with the contractual agreements between the segments (through internal transfer pricing) based on NERSA methodology principles and the Transmission Grid Code. Refer to note 7. The committee considered the assumptions and key judgements, inputs and sensitivities applied in the impairment assessment of the Eskom CGU. The committee noted that the recoverable amount (determined based on the higher of the fair value less costs of disposal and value in use) of the Eskom CGU, based on the value in use, is higher than the carrying value and is comfortable that there is no impairment loss on the Eskom CGU. Refer to note 3.3. Valuation of The committee considered feedback by management regarding the nature and quantum of costs capitalised to property, plant and property, plant equipment, that the costs were necessary in bringing the asset to the condition required for it to operate in the manner intended by and equipment management and that it is probable that future economic benefits associated with the asset will flow to Eskom in the future. The committee considered the write-off of costs capitalised including certain costs associated with the Majuba rail project. The committee also considered feedback from management that an appropriate methodology has been applied to determine the useful lives of assets based on the experience of Eskom of the performance of the assets in line with the operating and maintenance regimes of Eskom as well as the physical conditions and circumstances under which the assets operate. The committee acknowledged that there could be further adjustments to the carrying value of property, plant and equipment and identification of undetected invalid expenditure and losses due to criminal conduct in the future because of the outcome of internal and external investigations into crime, fraud and corruption that indicated overcapitalisation to assets of past expenditure incurred. Refer to note 2.4. Recovery of the The committee noted that no deferred tax asset was recognised at 31 March 2025 based on the deferred tax asset recoverability deferred tax assessment at 31 March 2025 as it is considered that there is no persuasive evidence that the company will generate sufficient taxable asset income over the forecast period against which the unused tax losses can be utilised, despite the company expecting to return to a tax paying position within the forecast period. Refer to note 14. Recovery of The committee considered the actions taken by Eskom to address the arrear debt challenge including enhancing of existing revenue and debt overdue trade management processes, enforcing Eskom’s rights through legal action and the implementation of the active partnering solution for municipalities. receivables (arrear debt) The committee monitored the municipal debt status and level of compliance of municipalities on a quarterly basis and acknowledged that the municipal debt relief programme is yielding minimal results. The committee noted that more than 85% of the 71 municipalities approved to participate in the municipal debt relief programme did not fully settle their current accounts on time. An amount of R0.5 billion was written off in 2025 relating to municipalities that were compliant with the debt relief conditions in line with the instruction from National Treasury. Refer to note 5.1.1. The committee noted the progress made regarding the settlement of certain overdue debt and billing disputes, including the five-year payment arrangement plan concluded in November 2024 with the City of Tshwane (recognised as a loan receivable) as well as the agreement reached in June 2025 with the City of Johannesburg for the payment of outstanding debt over the next four years. The committee recognised that the challenges regarding the recovery of outstanding receivables, specifically escalating municipal arrear debt, cannot be solved by Eskom alone and that it has an adverse impact on the liquidity and financial sustainability of distribution and the legal separation of NEDCSA. The continued support and cooperation from government and other stakeholders are crucial to address the root causes of the problem. Valuation of The committee considered the inputs and assumptions used in the valuation of financial instruments including derivatives held for risk financial management and embedded derivatives. The committee noted that management made use of independent experts to assist with the valuations instruments and to ensure alignment of the valuation curve methodology in determining the fair values of the financial instruments to market practice. hedge accounting The committee acknowledged that the valuation of these instruments is complex and that it is important that Eskom has access to valuation professionals with the required specialised skills and knowledge. Valuation and The committee considered the details of provisions including the movement in provisions over time, key assumptions and discount rates applied. adequacy of provisions The committee considered the adequacy of the decommissioning provisions and noted that detailed annual reviews are done by external including experts (coal, OCGT and pumped storage power station provisions are updated annually based on the results of yearly external reviews employee performed for five power stations on a rotational basis with the nuclear plant provision updated every second year) to re-assess the relevant benefit decommissioning and rehabilitation liabilities against the latest international practices and benchmarks as well as compliance to legislation. obligations The committee is satisfied that management has adequately considered the provision for compensation events as assessed by experts and legal advisors based on the latest available information. The committee acknowledged that the provision is based on the group’s past experience regarding the finalisation and outcome of compensation events and that the outcome of open compensation events, which are subject to a contractual adjudication process, could be different to management’s assessment thereof. The committee noted that the potential financial impact of compensation events claims cannot be precisely determined and that developments related to contingencies are continuously monitored. Refer to note 45.2. The committee considered the adequacy of the employee benefit obligations and noted that the liabilities are based on values calculated annually by external experts in terms of market practise in line with International Accounting Standard (IAS®) 19 Employee Benefits. ABC 22 The committee is satisfied that the group chief financial officer has the appropriate expertise and experience required for the role. The committee also recommended that the finance function continued to be further enhanced with financial resources, both in terms of capacity and capabilities, such as subject matter experts to execute complex functions as well as practises that allow for career planning from entry level employees, succession planning and retention of employees. The committee acknowledged the need for specialist functions to integrate, for example IFRS® Accounting Standards with corporate legal, particularly in the execution of corporate finance transactions. There is a need for improved and aligned finance business partnering and role clarity under a functional leadership business model as well as improved accountability, financial control, review and reporting with a higher professional skill set at component and subsidiary level as there is a large dependency on group finance for assistance. The committee concluded that the annual financial statements met the fair presentation requirements of the PFMA, Companies Act and IFRS Accounting Standards and that key judgements, estimates and the accounting treatment applied to significant transactions in the annual financial statements were appropriate. The committee is also satisfied that the related financial and non-financial disclosures have been adequately considered and addressed in the annual financial statements. Audit committee of wholly owned subsidiaries The committee performs the functions required by the Companies Act on behalf of the wholly owned subsidiaries of the group, except for NTCSA, Escap SOC Ltd (Escap) and Nqaba Finance 1 (RF) Ltd which have independent audit committees. The governance principles and processes for the effective management of wholly owned subsidiaries in the group are set out in the Subsidiary Governance Framework. The framework was revised and enhanced to address governance gaps relating to oversight and reporting of subsidiaries. The implementation of the framework is in progress and aims to enhance reporting mechanisms and governance practices across the group. The enhancements include regular feedback on the activities and performance of the subsidiaries to the committee on a regular basis as well as standing invitations to the chair of the audit committee to attend the subsidiary audit and assurance committees. Regular feedback by the respective subsidiary audit committees (NTCSA, Escap and Nqaba) and assurance committees (those subsidiaries where Eskom audit committee fulfils the functions of audit committee) assisted the committee in performing its functions relating to subsidiaries. Recommendation of the annual financial statements The committee is satisfied, notwithstanding the aspects considered in relation to the annual financial statements regarding the PFMA reporting challenges, control deficiencies, findings and observations identified (particularly the reliance on the SAP general controls) as well as ongoing investigations into fraud and corruption, that nothing else significant has come to the attention of the committee to indicate a material breakdown in the functioning of the controls, procedures and systems and that the controls are appropriate with compensating measures to ensure compliance with the requirements of the Companies Act, the PFMA and IFRS Accounting Standards. The committee has evaluated the annual financial statements of Eskom and the group for the year ended 31 March 2025 and, based on the information provided to it, considers that they comply, in all material respects, with the requirements of the Companies Act, the PFMA and IFRS Accounting Standards. The committee considered the independent auditors’ report and the qualified opinion relating to the accuracy and completeness of information disclosed in terms of the PFMA and that, except for this qualification, the consolidated annual financial statements are fairly presented in terms of IFRS Accounting Standards. The committee concluded that the information contained in the integrated and sustainability reports is reliable and does not contradict the information in the annual financial statements. The committee concurs that the adoption of the going-concern premise in the preparation of the annual financial statements is appropriate. The committee has therefore, at its meeting held on 26 September 2025, recommended the adoption of the financial statements by the board. FBB Abdul Gany Chair 29 September 2025 Statement by company secretary In terms of section 88(2)(e) of the Companies Act of South Africa, I certify that the company has filed with the Companies and Intellectual Property Commission all such returns and notices in terms of this Act, and all such returns appear to be true, correct and up to date. M Manjingolo Company secretary 29 September 2025 ABC 23 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries Report on the audit of the consolidated and separate financial statements Qualified opinion We have audited the consolidated and separate financial statements of Eskom Holdings SOC Limited and its subsidiaries (the group) set out on pages 38 to 136 which comprise the consolidated and separate statements of financial position as at 31 March 2025, the consolidated and separate income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, as well as notes to the consolidated and separate financial statements, including a summary of material accounting policy information. In our opinion, except for the effects and possible effects of the matters described in the basis for qualified opinion section of this auditor’s report, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the group as at 31 March 2025, and their financial performance and cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board and the requirements of the Public Finance Management Act 1 of 1999 (PFMA) and the Companies Act, 2008 (Act No. 71 of 2008). Basis for qualified opinion Irregular expenditure The public entity did not fully and accurately record irregular expenditure in note 51.1 to the consolidated and separate financial statements, as required by section 55(2)(b)(i) of the PFMA. This was due to inadequate systems of internal control to timeously detect and record this expenditure in the consolidated and separate financial statements, as well as inadequate controls to ensure appropriate assessment of potential irregular expenditure arising from non- compliant supply chain management processes in the current and prior years, various investigation reports, tracking of forensic report findings, inadequate record keeping and misuse of deviation process with a related party. Payments on certain contracts were made to parties who are not party to the original agreement. The value of irregular expenditure disclosed in the annual financial statements did not agree to underlying registers and supporting documents. As a result of the weaknesses identified and described above, we were unable to determine the full extent of the misstatement of irregular expenditure disclosed in terms of section 55(2)(b)(i) of the PFMA stated at R1 537 million (2024: R5 626 million restated) and R1 273 million (2024: R4 999 million restated) in note 51.1 to the consolidated and separate financial statements respectively, as it was impracticable to do so. Losses due to criminal conduct The public entity did not fully record losses due to criminal conduct in note 51.3 to the consolidated and separate financial statements, as required by section 55(2)(b)(i) of the PFMA. This was due to inadequate systems of internal control to timeously detect and record these losses in the financial statements. In addition, certain items of inventory (reworks and transfers) were written off as unexplained losses included in impairment and write-down of assets in note 36 to the consolidated and separate financial statements. As a result of the combined impact of these weaknesses identified and described above, we were unable to determine the full extent of the understatement of losses due to criminal conduct disclosed in the financial statements stated at R7 226 million (2024: R6 718 million) and R7 211 million (2024: R6 706 million) disclosed in note 51.3 to the consolidated and separate financial statements respectively, as it was impracticable to do so. Context for the opinion We conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report. We are independent of the group in accordance with the Code of professional conduct for auditors of the Independent Regulatory Board for Auditors (IRBA Code) and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ International code of ethics for professional accountants (Including International Independence Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. In terms of the IRBA Rule on Enhanced Auditor Reporting for the Audit of Financial Statements of Public Interest Entities, published in Government Gazette No. 49309 dated 15 September 2023 (EAR Rule), we report: Final materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error, and they are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated and separate financial statements. Our determination of materiality is a matter of professional judgement and is affected by our perception and understanding of the financial information needs of intended users, which is the quantitative and qualitative factors that determine the level at which relevant decisions taken by users would be affected by a misstatement. These factors helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated and separate financial statements as a whole. ABC 24 Based on our professional judgement, we determined final materiality for the consolidated and separate financial statements as follows: Materiality Group: R2 billion Company: R1.8 billion Basis for determining A key judgement in determining materiality is the appropriate benchmark to select, based on our perception of the needs of materiality shareholders. We considered which benchmarks and key performance indicators have the greatest bearing on shareholder decisions. In line with Auditor General of South Africa (AGSA) methodology, we determined that expenses remained the key benchmark for the group and company. Based on our professional judgement, for the group we determined materiality to be R2 billion which represents 0.8% of selected expenses. For the company, we determined materiality to be R1.8 billion which represents 0.7% of selected expenses. Group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, considering the structure of the group and the accounting processes and controls. Our group audit was scoped by obtaining an understanding of the group and its environment, including the structure and organisation of the group and company, and assessing the risks of material misstatement at the group and company level. We selected components at which audit work in support of the group and company audit opinion needed to be performed in order to provide an appropriate basis for undertaking audit work to address the risks of material misstatement. Our selection was informed by taking into account the component’s contribution to relevant classes of transactions, account balances or disclosures. Based on our assessment, we performed work at nine components, representing the group’s most material operations. For company, we performed work at five components. The following audit scoping was applied: • Eight and four components were audits of the component’s financial information for group and company respectively. • One component was an audit of one or more classes of transactions, account balances or disclosures for both group and company. Residual values were addressed by risk assessment and analytical procedures performed at a group level. These components account for 98% of the group’s total assets and 98% of the group’s revenue. In addition, these components account for 91% of the company’s total assets and 99% of the company’s total expenses. Material uncertainty related to going concern We draw attention to the matters below. The opinion is not modified in respect of these matters. We draw attention to note 3.2 in the consolidated and separate financial statements which highlights several indicators of material uncertainty regarding the group and company’s ability to continue as a going concern. The group and company are faced with significant challenges. These include: • Eskom remains in a debt-reliant liquidity position over the short, medium, and long term with reliance on the continued support from Government. Overall, the support under the Debt Relief Act has been reduced from R254 billion to R230 billion with a total of R180 billion having been drawn down by 2025. Any further reduction in the support under the Debt Relief Act would materially impact Eskom’s ability to service debt obligations in the future. • The National Treasury Municipal Debt Relief Programme was implemented to address municipal debt and improve payment levels. However, non- compliance with the programme conditions by the participating municipalities renders the effort unsuccessful in the long term, given the current trajectory of non-payment of current accounts. This places significant financial strain on the going-concern case and represents a material risk factor to the financial forecast over the forecast period. • Despite marked improvements in the levels of energy generation, as evidenced by the continued reduction in the number of load shedding days in 2025, the aged generation fleet continues to pose a significant risk to Eskom in meeting its cash flow forecasts, as the achievement of the going-concern cash flows hinges on the realisation of the underlying assumptions, specifically the Energy Availability Factor (EAF) and Energy Utilisation Factor (EUF). The going concern assumption remains fully dependent on the ongoing positive and incremental impact of the generation recovery programme. • Notable increases in technical and non-technical losses (for reasons such as illegal connections, ghost vending, selling of illegal tokens, etc.) which results in an increase in Eskom’s current and future cost to produce such energy, with no related billings and cash collections for these production volumes. There are several mitigating strategies and actions disclosed in note 3.2, however, there are various dependencies and internal and external uncertainties which could impact the ability to deliver against these strategies in the timelines anticipated. Certain of these plans and strategies may be impacted by the changing energy landscape, and that cannot be modelled due to the uncertainty of clarity and timing as to the implementation of the market code and the fully fledged Transmission Market Operator model. This is indicative of the existence of a material uncertainty that may cast significant doubt on the group and company’s ability to continue as a going concern. In terms of the EAR Rule, we report on how we have evaluated management’s assessment of the group and company’s ability to continue as a going concern. Our procedures in relation to going concern included, but were not limited to: • Evaluating the design and implementation of the key controls related to management’s assessment and conclusion on going concern. • Evaluating management’s prepared forecasts and budgets, including evaluating the reasonableness of key assumptions, with a particular focus on projected revenues, costs, capital expenditure (CAPEX), and available financing. • With the assistance of our business restructuring specialist, applying sensitivities to certain of management’s inputs and assumptions, including aligning annual tariff increases to the settlement agreement reached between NERSA and Eskom on errors made in Multi-Year Price Determination (MYPD) 6, incorporating capital-growth adjustments for municipal debt, and incorporating the cost of a stage 1 load-shedding scenario. • Testing the mathematical accuracy of management’s cash flow forecasts and comparing them to historical performance and post year-end results where available. • Reviewing the terms of existing financing arrangements, including compliance with debt covenants and the availability of undrawn facilities. • Considering the impact of any significant events or conditions identified during the audit that may affect the group and company’s ability to continue as a going concern. • Assessing the adequacy of disclosures in the going-concern note as to whether such appropriately reflect the key areas of uncertainty identified. Based on the procedures performed, we found that management’s assessment was reasonable and that the disclosures in the financial statements appropriately reflect the group and company’s circumstances in relation to going concern. ABC 25 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements of the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for qualified opinion and the material uncertainty related to going-concern sections, we have determined the matters described below to be the key audit matters to be communicated in our report. The key audit matters identified are applicable to the consolidated and separate financial statements. In terms of the EAR Rule, we are required to also report the outcome of audit procedures or key observations with respect to the key audit matters and these are included below: Key audit matters How the matter was addressed in the audit Information technology controls The group's operations are highly reliant on information technology Given the nature and pervasiveness of the internal breach and impact on general IT (IT) and a range of financial reporting systems. The IT environment control deficiencies identified, we adopted a fully substantive audit approach. In addition: is both complex and integral to operations due to: • Engaged our internal IT specialists and cyber security specialists to obtain an • The high volume of transactions processed daily across multiple understanding and evaluate the technical aspects of the internal breach, including the locations; and scope of compromised systems and effectiveness of the group's remediation efforts. • Significant reliance on both automated controls and IT- This also included an assessment of the effectiveness of the cyber security endpoint dependent manual controls. protection as well as the impact of the potential vulnerabilities in certain operational technologies. As a result, robust IT controls are essential to ensure that • With the assistance of our IT and cyber incident response specialists, we evaluated applications process data accurately and that any changes are the actions taken by management in response to the breach, including procedures to implemented appropriately. These controls play a key role in evaluate management's conclusions as to the extent of impacts of the breaches on mitigating the risk of fraud and error. the IT environment and to understand improvements made to the IT security control During the year, the group experienced an internal breach environment. affecting the key financial accounting system. The breach resulted • Assessed the effects of the breach on the rest of the IT environment, specifically user in unauthorised access to an IT system, raising concerns regarding access controls, and the effectiveness of internal control activities. the integrity and confidentiality of financial data. Given the • Reassessed our risk assessment and where required modified our audit plan to obtain complexity of the group's IT environment and the reliance on sufficient appropriate audit evidence on the key impacted classes of transactions and automated and IT-dependent controls, there is a risk that the account balances. breach may have compromised the accuracy and completeness of • Performed a formal consultation with our audit quality and risk technical department financial records. The incident also highlighted potential to evaluate our assessed audit impact and modified audit responses to concur whether vulnerabilities in the group's IT control framework, increasing the sufficient appropriate audit evidence on which to base an audit opinion was obtained. risk of material misstatement due to fraud or error. Addressing • We revised our sample sizes and thresholds used in performing substantive analytical this matter required significant auditor judgement, additional procedures where applicable to address the risk arising from the breach and internal auditor procedures and the involvement of IT and cyber security control deficiencies. specialists to assess the extent of the breach and its impact on the • Where applicable, reports produced by the systems which were relevant to the group’s financial reporting processes and controls, as a result this performance of our audit procedures were subjected to increased substantive testing has been identified as a key audit matter. to determine whether reliance could be placed on them. • We increased the level of involvement by our senior audit team members to perform additional audit procedures to address the breach and or to evaluate audit results including accuracy and completeness of financial information. • Assessed manual and automated journal entries. • We evaluated the sufficiency of audit evidence obtained by reassessing the results of audit procedures performed, including the appropriateness of the nature and extent of such evidence. In conclusion, based on the audit procedures performed and the level of expertise and effort associated with the current year audit, we are satisfied that our audit procedures were sufficient to mitigate the audit risks arising from the internal IT breach. ABC 26 Key audit matters How the matter was addressed in the audit Impairment assessment of property, plant and equipment and indefinite useful life intangible assets As disclosed in note 3.3, the directors assessed property, plant and In evaluating the impairment of property, plant and equipment within the applicable equipment for impairment in line with IAS 36 Impairment of Assets. CGU, we reviewed the “fair value less cost to sell” and “value in use” calculation/model The recoverable amount of a group of assets, or cash generating prepared by the directors, with a particular focus on the assumptions with the most unit (CGU), is to be measured whenever there is an indication that significant impact. This included the forecasted sales price, the forecasted available the value of the group of assets or the CGU may be impaired. generation capacity, increase in primary energy costs from OCGTs and the Significant judgement is required by management in assessing the implementation of carbon tax, discount rates, the long-term growth rate, and consistent impairment of the group of assets or the CGUs, which is implementation of the pricing methodology as identified by management. determined with reference to fair value less cost to sell or the value in use, based on the cash flow forecast for the CGU. Our procedures to address the key audit matter included the following: • Evaluated management’s updated accounting position around the appropriateness of The group’s financial position continued to be impacted by the the identified CGU within the group. constrained generation capacity on the back of plant performance • Evaluated the design and implementation of the key control relating to the preparation challenges resulting in the reliance on more expensive generating and review of the group's cash flow forecasts used in the respective impairment models. capacity from open cycle gas turbines (OCGTs) and independent • Recalculated the recoverable amount of the CGU. power producers (IPPs), which gave rise to an identified impairment indicator. • Assessed the appropriateness of the disclosures and sensitivity analyses presented. • With the assistance of our external legal specialist, we evaluated the appropriateness of Considering the introduction of a system market operator, the including the R54 billion settlement between NERSA and Eskom in the forecast tariffs. future liberalisation in the energy trading market, the introduction • With the assistance of our internal valuation, pricing, engineering, and accounting of license-specific tariff structures and uncertainty of the future specialists, we performed the following: pricing methodology that would be applied by NERSA, certain – Critically evaluated whether management’s assertion regarding a single CGU and assumptions contain significant estimation uncertainty. the recoverable amount calculation complies with the requirements of IAS 36 The key assumptions with the most significant impact on the cash Impairment of Assets (including the impact of the National Transmission Company flow forecasts were: South Africa (NTCSA) unbundling on the CGU assessment). • The evaluation of the appropriateness of the identified CGUs – Assessed the logic and mathematical accuracy of the valuation models against best within the group, considering the progress made on the practice and agreed relevant data to the latest long-term business plans, whilst also unbundling activities and related issued legislation. performing a retrospective comparison of forecasted cash flows to actual past • Revenue volumes – dependent on electricity sales volumes, performance and previous forecasts. forecasted embedded self-generation and generation capacity. – Benchmarked the sustainable EBITDA margin and growth rates, with a focus on • Revenue tariffs – dependent on management’s forecasted management’s forecast price path in comparison to the historic MYPD outcomes. price of electricity, which is based on the MYPD6 tariff increase – Assessed the weighted average cost of capital (discount rate) and the alignment of determined by NERSA on 30 January 2025, and subsequent this rate to the regulatory model. agreement reached due to errors that existed in the original – Assessed the forecasted available generation capacity, specifically the energy wheel, tariff determinations. including the forecasted impact of embedded self-generation. • Long-term growth rates and targeted earnings before interest, – Stress tested the key inputs (including EAF) within the production plan forecast taxes, depreciation and amortisation (EBITDA) ratio. period until 2050. • Considering Eskom’s ageing fleet, the available generation The discount rate and other assumptions were within independently determined capacity, including EAF and potential additional capacity from acceptable ranges. We note that the recoverable amount of the CGU is significantly current capex and/or maintenance projects. The reliance on dependent on NERSA approving the tariffs in line with the regulatory electricity pricing IPPs and OCGTs should the projects not materialise as per the methodology. This is a significant assumption, as in recent determinations, the group has forecast production plan. resorted to legal measures to have certain NERSA decisions reassessed post NERSA’s • Impact of carbon tax rates in future. announcements. In addition, the determination of the relevant CGUs might be impacted Based on the outcome of the respective cash flow models, the by the corporatisation of the Distribution and Generation divisions and at such time, directors did not record an impairment charge for the current year. this could result in different conclusions. Due to the significant estimation uncertainty and subjective nature We considered the related disclosures of the key dependencies and the sensitivities in of the assumptions used in these estimates, this was considered a the impairment model to be appropriate. key audit matter. ABC 27 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Report on the audit of the consolidated and separate financial statements (continued) Key audit matters (continued) Key audit matters How the matter was addressed in the audit Impact of the ongoing Eskom’s forensic investigation into the illicit creation of prepaid tokens (Illicit prepaid tokens) Eskom sells prepaid electricity tokens via the online vending system Our audit procedures to address the key audit matter were as follows: (OVS) and recognises revenue in line with IFRS 15, Revenue from • Inquired of the Chief Technology Information Officer, managing director of Eskom Contracts with Customers as disclosed in note 2.19. Distribution and the Eskom Distribution IT team to understand the preventative controls, security changes and other systems changes implemented in the current year. Revenue is recognised for tokens generated for which cash has been received through Eskom’s national vending agents. An • Held discussions with management’s forensic experts, Eskom forensics as well estimate for the deferral of revenue is processed for electricity that as relevant regulatory investigators to understand the various steps taken post has not been delivered against purchased tokens, based on the December 2024 to curtail the fraud as well as understanding if the fraud scheme had historical purchasing patterns of customers. changed from the prior year. • Assessed the competence, qualifications and objectivity of the group and company’s Eskom’s accounting and key financial reporting processes related to external forensic experts, including an assessment of the scope of their investigation prepaid electricity is highly dependent on the automated processes and reviewing conclusions reached. within the prepaid IT system. • Engaged specialists with critical skills to undertake the relevant procedures. The The ongoing forensic investigation which was commissioned in the specialists include individuals in the fields/disciplines of information systems, cyber 2023 financial year led to the identification of unauthorised use of and security forensics, data analytics, information system architects, legal, technical privileged level access within the prepaid IT ecosystem to create illicit accounting and technical auditing to assist the audit team to perform updated risk usable prepaid tokens, in both the prior and current financial years. assessment procedures taking into account the impact on the current year’s audit. • Obtained an understanding and updated the systems architecture of the prepaid IT As reported previously, our cyber risk assessment procedures and ecosystem developed in the prior year which included the relevant hardware, software, our IT audit specialists concluded that a material breakdown of underlying processes, controls and links to key interdependent organisations. internal controls within the prepaid IT ecosystem had occurred. • Obtained an understanding of Eskom’s prepaid ecosystem including the third-party The significant control deficiencies identified in the prior year agents, data centres and the relevant associations. included inappropriate user access controls, dated systems with a lack of available data logs, inadequate back-up procedures, and • Performed walkthroughs of the prepaid IT ecosystem including all data centres. With the limited understanding by Eskom staff of the prepaid environment assistance of our IT and cyber incident response specialists, we evaluated the actions taken including hardware and relevant systems. by management in response to the breach, including procedures to evaluate management's conclusions as to the extent of impacts of the breach on the IT environment and to Albeit that certain control deficiencies were addressed by understand improvements made to the IT security control environment. management during the period to March 2025, significant control • Assessed the effects of the breach on the rest of the IT environment, specifically user deficiencies remain which have resulted in an inability to determine access controls, and the effectiveness of internal control activities. the full extent of illicit prepaid tokens created. In addition, to assess • Obtained independent confirmations from the National Vending Agents on total whether the illicit prepaid tokens created have been utilised by tokens sold and revenue earned for the financial year. This was reconciled to the outside parties, is a manual process of inspecting meters. prepaid revenue recorded and the commissions paid in the current year. The existence of illicit prepaid tokens results in a heightened risk • Performed compliance procedures related to PFMA on the tendering process for the regarding the occurrence and completeness of prepaid revenue new vending agreements entered into in the current financial year. recognised in terms of IFRS 15 and disclosed in note 32. • Assessed the impacts of the breach and management's evaluation and conclusions with respect to possible non-compliance with applicable local legislation, in particular In addition, as disclosed in note 45, in terms of IAS 37 Provisions, with section 34(1) of the Prevention and Combatting of Corrupt Activities of South Contingent Liabilities and Contingent Assets, Eskom has a present Africa (PRECCA). obligation due to the probability of an outflow of economic benefit through the future use of illicit prepaid tokens by customers • Assessed the appropriateness of the legal opinion obtained in the prior year on managed on the Eskom OVS. As a result of the significant the potential liabilities on Eskom for illicit tokens created relating to service level deficiencies to support the accuracy and completeness of data in agreements with various parties in the prepaid ecosystem. the online vending operating system and to assess the extent of • With the assistance of our technical accounting specialists, we evaluated the impacts tokens utilised to date, management is unable to measure this arising from the continuous breach on the financial statements. liability with sufficient reliability, resulting in the disclosure of the • Consulted with our auditing specialists on the impact on the group's internal control contingent liability. The key judgements with the most significant environment and the sufficiency of the audit work we have performed in response to impact on the contingent liability are whether the creation and the breach. distribution of illicit prepaid tokens creates an obligation for • Using management’s forensic specialist data for the period October 2023 – providing electricity for illicit prepaid tokens that could be utilised March 2025, we engaged our data analytics specialists to determine the valid tokens, by customers managed on the Eskom OVS and, from other parties as well as the illicit tokens created for Eskom. within the prepaid ecosystem arising from service level agreements. • We performed back-end infrastructure (network, storage, operating system and We identified this as a key audit matter due to its impact on the hardware security module) exploitation testing which included assessing access logs prepaid revenue and the contingent liabilities assessment. This and configurations in terms of the controls over the prepaid IT environment. required an increased extent of audit effort, including the need for • We performed front-end application testing which included general IT controls and us to involve professionals with expertise in cyber incident walkthroughs of the prepaid IT environment with a focus on segregation of duties. response, data analytics and IT. This also required a high degree of • Obtained written representations from management concerning its intent to limit the auditor judgement in identifying, testing, and evaluating the exposure emanating from the creation and distribution of illicit tokens, as well as the potential extent and consequences of the information system work to rectify all manual and/or system and general IT control deficiencies identified. breach on the group and company's IT environment and controls. • Evaluated the accounting policy disclosure of prepaid revenue. • Evaluated the significant assumptions used by management to estimate the contingent liability and the disclosures thereof. As disclosed in note 51.3, the forensic investigation remains ongoing. We consider the related disclosures of the prepaid revenue accounting policy in note 2.19 and contingent liabilities in note 45.2 to be appropriate. ABC 28 Key audit matters How the matter was addressed in the audit Material breakdown in internal controls over financial reporting and the impact on the audit of the financial statements Robust internal controls over the financial reporting process are Our primary response to this audit engagement was to deploy senior audit personnel and essential to ensure that financial statements are reliable and fairly engage both internal and external specialists with expertise in areas requiring significant presented. Internal control refers to the processes designed, complexity and judgement. In addition, we adopted a predominantly substantive audit implemented, and maintained by those charged with governance, approach for both the separate and consolidated financial statements, making use of management, and other personnel to provide reasonable assurance advanced analytical tools to enhance our understanding and response to fraud risks. regarding the achievement of the entity’s objectives in relation to the reliability of financial reporting, the effectiveness and efficiency The principal procedures performed to address this key audit matter included: of operations, and compliance with laws and regulations. • Exercising auditor judgement in planning the nature, timing, and extent of audit procedures over financial statement account balances. The deployment of management’s Audit Recovery Process began • Adjusting the timing of audit procedures to perform them closer to the balance sheet date. in the latter part of the financial year, reducing the efficacy of the • Delaying the audit process to provide management, the directors, and the audit team initiative in the current year. During the audit, we again identified with sufficient time to resolve key areas of judgement. significant weaknesses in the group's control environment, including inadequate adherence to established policies and • Reassessing certain critical judgements and reviewing significant decisions made on procedures, insufficient monitoring of internal controls, and a lack estimates and judgements in the prior year. of accountability for control failures. These deficiencies increase the • Re-evaluating our scoping thresholds and control risk assessments in light of the risk of material misstatement in the financial statements, whether material control deficiencies identified. due to error or fraud. The weak control environment also • Increasing the number of sample selections beyond what would have been required contributed to material errors in the financial statements, delays in had the entity’s controls been appropriately designed and operating effectively. availability of supporting documentation, insufficient consideration • Assessing the sufficiency of audit evidence obtained by evaluating the results of our of transactions and the resultant accounting treatment and delays procedures, including the appropriateness of the nature and extent of such evidence. in the financial reporting process. Addressing these issues required substantial auditor judgement and additional audit procedures to Based on the procedures performed, and considering the level of expertise and effort obtain sufficient appropriate audit evidence. Given the pervasive applied during the current year’s audit, we are satisfied that our audit approach was impact of these control deficiencies on the reliability of financial sufficient to address the impact of the material breakdown in financial controls. reporting, we consider this to be a key audit matter. Valuation of complex financial instruments The group and company are a party to certain derivative financial Our procedures to respond to the key audit matter included the following: instruments. These include embedded derivatives in supply • Evaluated the design and implementation of certain internal controls over the group contracts, and derivatives entered into for risk management as and company's valuation of derivative financial instruments. described below: • Assessed the impact of the invoked contract clauses called upon by the customers in a) Embedded derivatives in supply contracts: In accordance with the current year on the key inputs used in the valuation of the embedded derivative. IFRS 9 Financial Instruments, embedded derivatives that are • Assessed the impact of information available prior and post year end on the valuation not closely related to the host contract are separately of the embedded derivative. recognised and measured at fair value through profit or loss. • Reviewed and assessed the appropriateness of the hedge accounting policies adopted. Certain electricity supply contracts entered into by the group • Involved valuation professionals with specialised skills and knowledge, who assisted in and the company have underlyings that are not closely related the evaluation of the group and company's hedge documentation for certain contracts, to the host electricity supply contract, such as commodity for the purposes of determining whether the related accounting treatment was in prices and foreign currencies. This has resulted in the accordance with the requirements of the prevailing accounting standards. recognition of embedded derivatives which have been measured at fair value through profit or loss, applying the • Assessed the competence, qualifications and objectivity of group and company’s guidance in IFRS 13 Fair Value Measurement. external specialists. • For selected instruments, with the assistance of our valuation specialists we: b) Derivatives used for risk management: the group and – Challenged the appropriateness of the valuation methodology, inputs and company entered into forward exchange contracts and cross technique used by the group and company in the valuation of the instruments, currency swaps that are designated as hedging instruments. where relevant. The group and company apply the hedge accounting – Reperformed the valuation using an independent model and compared the fair requirements of IAS 39 Financial Instruments: Recognition and value results to group and company’s valuation to assess the reasonableness of the Measurement. In addition, the group and company are a party model methodology and the output of model calculations. to derivatives which do not qualify for hedge accounting but are used for economic hedging. The derivatives used for risk – Evaluated the swap curves, overnight indexed swap curves, ZAR, USD, and EUR management are measured at fair value through profit or loss foreign exchange basis adjusted curves and the ZAR CPI curves used in the as required by IFRS 9. valuation of the derivatives. – Reperformed the valuation of commodity forwards used to hedge various The valuation of both the embedded derivatives and the commodities. derivatives used for risk management rely on complex valuations. • With regards to the derivatives used for risk management, misstatements were Inputs include estimated electricity consumption, forward curves identified related to inaccurate forward curves for valuation adjustments, curve for valuation adjustments, curve interpolation methodology and interpolation methodology and forward rate calculation methodology. The appropriate forward rate calculation methodology. In addition, where corrections were made for both numeric and disclosure misstatements. appropriate, the group’s valuations include the credit risk of • With regards to the embedded derivatives in supply contracts, a control deficiency Eskom (known as debit value adjustment “DVA”) and was identified over the consideration of the contract clauses invoked as well as the counterparties (known as credit value adjustment “CVA”). Due electricity consumption within the valuation model. In addition, a number of differences to the complexities of the contract, management also assess the were identified with the most material arising from an inadequate consideration of impact of the customer exercising key clauses in the contract on contract clauses called upon by the customer as well as the impact thereof on the the valuation of the embedded derivative. These inputs have a electricity consumption and the ultimate valuation of the embedded derivatives. The significant impact on the measurement of the derivatives. As a impact of these inaccuracies resulted in material corrected misstatements on the result, the valuation of the embedded derivatives, and derivatives evaluation of the instruments at reporting date and the valuation of the derivative used for risk management is a key audit matter. asset. The misstatements identified during the audit were corrected, and the related disclosures reflected in the annual financial statements are appropriate. ABC 29 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Report on the audit of the consolidated and separate financial statements (continued) Key audit matters (continued) Key audit matters How the matter was addressed in the audit Valuation of the compensation events provisions relating to mega-build projects As disclosed in notes 2.18, 28, and 45 to the consolidated and Our audit procedures included the following: separate financial statements, the group recognises provisions for • We assessed the design and implementation of controls in place, as well as the compensation events. adequacy of oversight exercised by the compensation events committee, responsible contract managers, and Eskom executives, to ensure that settled compensation events Compensation event liabilities arise when contractors assert that are valid and that appropriate provisions are recognised for outstanding claims. they are entitled to additional payments from Eskom due to factors such as scope changes, design errors, industrial disputes, • For a sample of contractor claims, we: prolongation claims, contractor replacement costs, access delays, – Evaluated the validity of each claim by reference to the relevant contract or acceleration incentives. These circumstances may result in the documentation. re-assessment of project prices, key dates, or completion dates. – Reviewed reports from, and held discussions with, Eskom’s internal and external Judgement is required in determining the value of claims experts to understand the significant assumptions, judgements, and methodologies recognised as liabilities (i.e., the valuation and allocation assertion), applied in determining the estimates and the basis for their conclusions. as there is a risk that claims may be received for which no liability – Considered the reasonableness of estimates used in recognising provisions for is recognised, or that provisions may be insufficient. compensation events by inspecting claim submissions, quantity surveyor reports, and correspondence between the contractor and Eskom. The final amount of the obligation is subject to various factors, many of which are beyond the group’s control. This includes – Assessed the completeness of claims recognised by reconciling our findings to the contractual consultations, dispute adjudication, and, if necessary, claim registers and reviewing minutes from compensation event claims meetings. arbitration processes, all of which can affect both the timing and – Evaluated the competence, capabilities, and objectivity of Eskom’s internal and, amount of claim settlements. where applicable, external experts by reviewing their qualifications and professional memberships. As set out in accounting policy note 2.4, the group and company – Considered the historical accuracy of previous provisions raised and the have acknowledged certain overpayments on mega-build projects settlements ultimately made. that are currently under investigation. This remains an ongoing – Updated our understanding of claims in progress up to the date of signing the matter. During the current year, external construction experts financial statements, and considered subsequent rulings to determine whether any continued their assessment at Kusile and commenced their review adjustments were required as at 31 March 2025. at Medupi, with no further overpayment write-offs recorded in the year. • In relation to potential overpayment write-offs, we held discussions with management’s internal and external experts to understand the progress made during the year on the Estimating the amount required to settle claims arising from investigation and assessment of overpayments on the major build projects. compensation events involves significant judgement. Given the high degree of judgement and estimation involved in determining We are satisfied that the resulting disclosures in the financial statements are appropriate. these provisions, this is considered to be a key audit matter. Emphasis of matter We draw attention to the matters below. Our opinion is not modified in respect of these matters. Events after the reporting period We draw attention to note 48 in the consolidated and separate financial statements, which discloses several material non-adjusting and adjusting events. Investigations into possible corruption and related impact on capital projects We draw attention to note 2.4 in the consolidated and separate financial statements, which discloses the group and company’s accounting policy on the impact of corruption on the valuation of capital projects which states that once an investigation on the overpayment on capital projects is finalised and if required, an adjustment is made to the carrying value. Responsibilities of the accounting authority for the consolidated and separate financial statements The board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with IFRS, the requirements of the Companies Act and PFMA, and for such internal control as the accounting authority determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, the accounting authority is responsible for assessing the group and company’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the accounting authority either intends to liquidate the group and company or to cease operations, or has no realistic alternative but to do so. Responsibilities of the auditor for the audit of the consolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. A further description of our responsibilities for the audit of the consolidated and separate financial statements is included in the annexure to this auditor’s report. This description, which is located at page 36, forms part of our auditor’s report. ABC 30 Report on the audit of the annual performance report Introduction and scope In accordance with the Public Audit Act 25 of 2004 (PAA) and the general notice issued in terms thereof; we must audit and report on the usefulness and reliability of the reported performance against predetermined objectives for selected key performance areas presented in the shareholders compact performance section of the directors’ report. The accounting authority is responsible for the preparation of this annual performance report. We selected the following key performance areas presented in the shareholders compact performance section of the directors’ report for the year ended 31 March 2025 for auditing. We selected key performance areas that measures the entity’s performance on its primary mandated functions and that are of significant national, community or public interest. Key performance area Page numbers Purpose Generation 14 Measurement and monitoring of key indicators specific to the operational efficiency within electricity generation including energy availability at a power station level and proportion of energy unavailable because of planned shutdowns and planned load reductions. Measurement and monitoring of the mass of particulates emitted from Eskom’s coal-fired power stations, the amount of raw water used for power generation, the average increase in coal cost per annum and various indicators emanating from the Atmospheric Emissions License compliance requirements imposed per power station. Measurement and monitoring of the creation of new assets to support the expansion of the current generation capacity and improve the ratio of electricity supply in relation to electricity demand. Transmission 14 Measurement and monitoring of key indicators specific to the operational efficiency within electricity transmission including the measurement of transmission interruptions experienced as well as transmission infrastructure expansion and strengthening projects. Distribution 14 Measurement and monitoring of key indicators specific to the operational efficiency within electricity distribution including the measurement of distribution energy losses, the average duration of distribution interruptions experienced by customers during a year and the level of customer cash collection from invoiced electricity supplied. Just Energy Transition 14 Measurement and monitoring of key indicators focussed on ensuring the shift towards a low-carbon electricity future is just and occurs without extensive disruptions to socio-economic development. Executing on the Just Energy Transition strategic implementation plan enables the delivery of the government’s Just Energy Transition Framework. Finance 14 Measurement and monitoring of key financial sustainability indicators focussed on operational profitability, operating cash flow availability to service net interest on borrowings as well as interest and capital repayments on borrowings, as well as progress in identified and targeted operational and capital cost savings/optimisation initiatives, cost avoidance initiatives, working capital optimisation initiatives as well as income recovery initiatives against established baselines as envisaged within the Eskom Profit Maximisation Programme measurement rules. Fraud and Corruption 14 Measurement and monitoring of key indicators specific to the timely resolution of cases concerning corruption, fraud, and other misconduct as recorded within the Eskom Holdings SOC Limited group Case Management System. The indicators aim to measure and monitor the period between recording an allegation within the case management system and the completion of an initial/preliminary assessment. Additional indicators track and assess whether a formal investigation is initiated promptly when recommended by the initial or preliminary assessment, as well as the degree to which recommendations arising from the formal investigation have been fully implemented. The indicators within this key performance area further extends to the measurement and monitoring of the status of submission, by designated employees, of completed security clearance assessments documentation for further processing by the State Security Agency of South Africa. Please note that this indicator does not measure and monitor the successful completion of the security vetting by the State Security Agency of South Africa but simply tracks the level of compliance in its submission. An indicator is included that aims to measure and monitor compliance with employee background checks being completed by an independent third party in line with the Risk and Integrity Management Framework. We evaluated the reported performance information for the selected key performance areas against the criteria developed from the performance management and reporting framework, as defined in the general notice. When an annual performance report is prepared using these criteria, it provides useful and reliable information and insights to users on the public entity’s planning and delivery on its mandate and objectives. We performed procedures to test whether: • the indicators used for planning and reporting on performance can be linked directly to the public entity’s mandate and the achievement of its planned objectives. • all the indicators relevant for measuring the public entity’s performance against its primary mandated and prioritised functions and planned objectives are included. • the indicators are well defined to ensure that they are easy to understand and can be applied consistently, as well as verifiable so that we can confirm the methods and processes to be used for measuring achievements. • the targets can be linked directly to the achievement of the indicators and are specific, time bound and measurable to ensure that it is easy to understand what should be delivered and by when, the required level of performance as well as how performance will be evaluated. • the indicators and targets reported on in the annual performance report are the same as those committed to in the approved initial or revised planning documents. • the reported performance information is presented in the annual performance report in the prescribed manner and is comparable and understandable. • there is adequate supporting evidence for the achievements reported and for the reasons provided for any over or underachievement of targets. ABC 31 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Report on the audit of the annual performance report (continued) We performed the procedures for the purpose of reporting material findings only; and not to express an assurance opinion or conclusion. The material findings on the performance information of the selected key performance areas are as follows: Finance: Savings from turnaround Initiatives A reported achievement of savings of R16.3 billion was recorded against a target of R5.4 billion. However, this reported achievement was not supported by sufficient audit evidence. The figure represents the cumulative savings from 36 separate initiatives, each calculated by comparing actual results for the year against an approved baseline. Our audit found that the reported achievement was overstated by R2.9 billion due to errors in the actual results used to determine the saving. Additionally, we identified a potential further overstatement of R3.4 billion arising from the inappropriate estimates and judgements applied by management in establishing the approved baselines. Furthermore, in addition to the R6.3 billion overstatement identified, one initiative, contributing R1.4 billion to the reported savings, could not be adequately substantiated. We were unable to verify the actual savings for this initiative but estimate that the true amount is materially less than reported. Consequently, it is likely that the actual achievement against the target was lower than reported. Fraud and Corruption: Vetting and Integrity Assessment: Security clearance: Board and designated employees An achievement of 19.15% was reported against a target of 70%. However, we could not determine if the reported achievement was correct as adequate supporting evidence was not available to substantiate the performance during quarter one and quarter two of this financial year. Consequently, the achievement might be more or less than reported and was not reliable for determining if the target had been achieved. Missing indicator Eskom Distribution is responsible, amongst others, for the ongoing maintenance and strengthening of plant assets and the creation of new assets to support the expansion of the current distribution capacity and improve the ratio of electricity supply in relation to electricity demand. However, an indicator to measure performance on the progress of Eskom Distribution infrastructure expansion and the conversion from conventionally billed post-paid customers to prepaid customers and Smart grid technologies was omitted from the approved planning documents. Consequently, progress towards the achievement of this mandate was not reported on in the shareholders compact performance section of the directors’ report. Other matter We draw attention to the matters below. Achievement of planned targets The annual performance report, which is included in the directors’ report, includes information on reported achievements against planned targets and provides explanations for over and under achievements. This information should be considered in the context of the material findings on the reported performance information. Material misstatements corrected We identified material misstatements in the Finance key performance area of the annual performance report submitted for audit resulting from corrections to the underlying financial statements submitted for audit. In addition, we identified material misstatements in the key performance indicators reported within the Fraud and Corruption and Just Energy Transition key performance areas submitted for auditing. Management did not correct all the misstatements. The material uncorrected audit misstatements form the basis of our material findings as reflected above. Report on compliance with legislation In accordance with the PAA and the general notice issued in terms thereof, we must audit and report on compliance with applicable legislation relating to financial matters, financial management and other related matters. The accounting authority is responsible for the public entity’s compliance with legislation. We performed procedures to test compliance with selected requirements in key legislation in accordance with the AGSA findings engagement methodology. This engagement is not an assurance engagement. Accordingly, we do not express an assurance opinion or conclusion. Through an established AGSA process, we selected requirements in key legislation for compliance testing that are relevant to the financial and performance management of the public entity, clear to allow consistent measurement and evaluation, while also sufficiently detailed and readily available to report in an understandable manner. The selected legislative requirements are included in the annexure to this auditor’s report. The material findings on compliance with the selected legislative requirements, presented per compliance theme, are as follows: Annual financial statements The financial statements submitted for auditing were not fully prepared in accordance with the prescribed financial reporting framework (IFRS Accounting Standards) as required by section 55(1)(b) of the PFMA. The submitted financial statements contained material misstatements on property, plant and equipment, loans receivable, capital and reserves, impairment of financial assets, net fair value and foreign exchange loss identified by the auditors which were subsequently corrected. Furthermore, the note disclosures relating to capital management and going concern, financial risk management, accounting classification and fair value, segment information, deferred tax, loans receivables, derivatives held for risk management, net impairment and write down of assets, income tax, cash generated from operations, related-party transactions and balances and events after the reporting period contained material misstatements which were subsequently corrected. This non-compliance resulted in a reportable irregularity as described in the report on other legal and regulatory requirements. A similar non-compliance was reported in the prior year. Expenditure management Effective and appropriate steps were not taken to prevent irregular expenditure, as required by section 51(1)(b)(ii) of the PFMA. As reported in the basis for the qualified opinion, the amount of irregular expenditure disclosed in note 51.1 of the separate financial statements does not reflect the full extent of the irregular expenditure incurred and the full extent of the irregular expenditure could not be quantified. The majority of the irregular expenditure disclosed in the financial statements was caused by non-compliance with section 51(1)(a)(iii) of the PFMA. A similar non-compliance was reported in the prior year. Effective steps were not taken to prevent fruitless and wasteful expenditure, as disclosed in note 51.2 to the annual financial statements, as required by section 51(1)(b)(ii) of the PFMA. A similar non-compliance was reported in the prior year. Revenue management Effective and appropriate steps were not taken to collect all revenue due, as required by section 51(1)(b)(i) of the PFMA. A similar non-compliance was reported in the prior year. ABC 32 Procurement and contract management Some of the goods, works or services were not procured through a procurement process which is fair, equitable, transparent and competitive, as required by section 51(1)(a)(iii) of the PFMA. We were unable to obtain sufficient appropriate audit evidence that contracts were awarded to bidders in an economical manner and prices for the goods or services were reasonable as required by section 57(b) of the PFMA. We were unable to obtain sufficient appropriate audit evidence that contracts and quotations were awarded to bidders that scored the highest points in the evaluation process as required by section 2(1)(f ) of PPPFA and Preferential Procurement Regulation 2022. A similar limitation was reported in the prior year. Consequence management We were unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against officials who had incurred irregular and fruitless and wasteful expenditure as required by section 51(1)(e)(iii) of the PFMA. This was due to investigations into irregular and fruitless and wasteful expenditure not being performed. This limitation resulted in a reportable irregularity as reported in 2022, 2023, 2024 and 2025 on the report on other legal and regulatory requirements. A similar limitation was reported in the prior year. Where investigations were performed, disciplinary steps were not taken against some officials who had permitted irregular and fruitless and wasteful expenditure, as required by section 51(1)(e)(iii) of the PFMA. This non-compliance resulted in a reportable irregularity as reported in 2022, 2023, 2024 and 2025 on the report on other legal and regulatory requirements. A similar non-compliance was reported in the prior year. Investigations were not conducted into all allegations of financial misconduct committed by officials, as required by Treasury Regulation 33.1.1. The non- compliance was reported as a reportable irregularity in 2022, 2023, 2024 and 2025 on the report on other legal and regulatory requirements. A limitation was reported in the prior year. Disciplinary hearings were not held for confirmed cases of financial misconduct committed by officials, as required by Treasury Regulation 33.1.1. The non- compliance was reported as a reportable irregularity in 2022, 2023, 2024 and 2025 on the report on other legal and regulatory requirements. A limitation was reported in the prior year. Due to inadequate processes of management of cases and investigations, we are unable to obtain sufficient evidence that allegations of corruption or theft, fraud, extortion, forgery, uttering a forged document which exceeded R100 000 were reported to the South African Police Service (SAPS), as required by section 34(1) of the Prevention and Combatting of Corrupt Activities of South Africa. This limitation is included in a reportable irregularity as reported in 2022, 2023, 2024 and 2025 on the report on other legal and regulatory requirements. A similar limitation was also reported in the prior year. State-owned enterprise oversight and governance The annual return and the latest approved audited financial statements were not timeously filed, as required by section 33(1)(a) of the Companies Act and 30(2) of the Companies Regulation. Reportable irregularities In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report that we have identified reportable irregularities in terms of the Auditing Profession Act. We have reported such matters to the IRBA. The matters pertaining to the reportable irregularities have been described in note 52.1 to the consolidated and separate financial statements. Other information The accounting authority is responsible for the other information. The other information comprises the information included in the document titled “Eskom Annual financial statements 31 March 2025” which includes the directors’ report, the report of the audit committee and statement by the company secretary as required by the Companies Act, and the document entitled “Eskom Integrated Report”, which were obtained prior to the date of this report. The other information does not include the consolidated and separate financial statements, our auditor’s report and those selected key performance areas presented in the shareholder compact performance section of the directors’ report that have been specifically reported on in this auditor’s report. Our opinion on the financial statements and our findings on the reported performance information and the report on compliance with legislation do not cover the other information and we do not express an audit opinion or any form of assurance conclusion on it. In connection with our audit, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements and the selected key performance areas presented in the shareholder compact performance section of the directors’ report, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. The matters included in the Basis of Qualification will materially impact the other information and in addition, we describe below that we have concluded that a material misstatement of the other information exists as it relates to the disclosure of irregular expenditure, fruitless and wasteful expenditure and losses due to criminal conduct. The opening balances for irregular expenditure, fruitless and wasteful expenditure were subjected to audit in the prior years, with irregular expenditure being qualified due to it not being fully and accurately recorded and fruitless and wasteful expenditure being qualified due to it not being fully recorded. In addition, taking into account, the qualifications above relating to current year expenditure and disclosure, and the fact that inadequate progress has been made to address the control deficiencies that gave rise to these conclusions, we highlight that the information presented on page 155 to 160 of the Eskom Integrated Report remains materially misstated. The ageing of matters still under determination for disclosure as either irregular expenditure and fruitless and wasteful expenditure is on average 1.80 years, coupled with the reportable irregularity on delay in investigations in note 51, means that any findings on irregular expenditure and fruitless and wasteful expenditure would not be timeously disclosed and will be adjusted in the prior year opening balance in the information presented in the Eskom Integrated Report. These matters indicate that the cumulative irregular expenditure disclosed in the integrated report may not be complete and accurate, and the cumulative fruitless and wasteful expenditure disclosed in the integrated report may not be complete. ABC 33 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Internal control deficiencies We considered internal control relevant to our audit of the consolidated and separate financial statements, annual performance report and compliance with applicable legislation; however, our objective was not to express any form of assurance on it. The matters reported below are limited to the significant internal control deficiencies that resulted in the basis for the qualified opinion, the findings on the annual performance report and the material findings on the compliance with legislation included in this report. In the latter part of the financial year, management commenced on a three-year recovery plan to address significant internal control deficiencies. The timing of the implementation has impacted on the realisation of the benefits derived from the plan. The majority of the significant internal control deficiencies that resulted in negative audit outcomes for at least the prior years and the current year were therefore not adequately addressed. Our audit reports in 2022, 2023, 2024 and 2025 have consistently highlighted a material breakdown in controls over compliance with applicable laws and regulations that have hindered the public entity’s ability to prevent material non-compliance findings resulting in modified audit opinions. There were inadequate controls in place to ensure that amounts reported in the PFMA disclosure note were supported by accurate and complete registers. We identified inaccurate, insufficient and inappropriate evidence which impacted the efficacy of the audit process. Management processes have not sufficiently addressed these control weaknesses, resulting in this deficiency being reported for the prior years and in the current year. Management did not implement adequate, sufficient, and appropriate internal controls to ensure effective self-assessment of procurement transactions and proper monitoring of awarded contracts for compliance with applicable laws and regulations. In addition, the loss control function does not have adequate processes in place to ensure that non-compliances are identified to ensure complete reporting. Management does not have adequate processes in place to ensure that matters referred by forensics to business units for further investigation are appropriately investigated and, where necessary, disclosed as losses due to criminal conduct. Management have not sufficiently implemented the necessary interventions to enhance compliance to applicable laws and regulation relating to consequence management, which includes management’s commitment to take disciplinary actions within three months from the date they become aware of the transgression. This is demonstrated by repeated instances of non-compliance with relevant legislation reported both in the current and prior years, with audit outcomes remaining unchanged. Management did not resolve the backlog in concluding investigations relating to alleged financial misconduct, the assessment and determination of alleged irregular expenditure, as well as fruitless and wasteful expenditure. This matter was reported in previous years, and adequate controls have not been implemented in the current year to ensure that the backlogs are resolved. Management did not implement adequate controls to ensure that disciplinary actions are taken against all transgressors following the concluded investigations. Furthermore, where disciplinary actions are taken, there is inadequate controls to ensure that disciplinary actions are appropriate, consistent, and corrective towards the severity of the transgression committed. Management did not implement adequate controls to ensure that forensic investigations are timeously concluded. The delays in concluding forensic investigations into alleged financial misconduct, fraud and supply chain management improper conduct, resulted in the inability to confirm the existence of matters that need to be reported to SAPS in terms of section 34(1) of PRECCA, mitigate any possible future exposures to financial losses, and effective consequence management. The similar material non-compliance was also noted in the prior year. The accounting authority did not exercise adequate oversight over the financial statements before submitting them for audit. We identified material misstatements to the financial statements submitted for audit and these material misstatements were appropriately corrected in the final audited financial statements. Management did not implement adequate internal controls around the management of inventory. Though we have noted an improvement from what was reported in the prior year, Eskom is still susceptible to material losses of inventory due to the poor control environment across all Eskom power stations. The inventory matters described above result in potential losses due to criminal conduct and points to uneconomic use of resources of the public entity. Revenue collection remains a concern as the entity continues to struggle to collect the revenue due. The steps taken for collection did not yield the desired results as the revenue collection remains an issue. Management has not adequately implemented measures to collect all revenues due to the public entity and thus compromising the long-term financial sustainability of the public entity. Management did not adhere to policy requirements for awarding internal suppliers under the single source mechanism. The internal supplier’s capacity to execute on the works was not assessed prior to awarding the contracts. We reported negative audit outcomes for procurement and contract management in the current and prior years. The accounting authority did not exercise adequate oversight over those responsible for ensuring that all procurement transactions and contracts have followed the appropriate procurement and contract management process in accordance with the appropriate legislative requirements. We reported a similar control deficiency in the prior year. The accounting authority did not exercise adequate oversight nor held management accountable for the less than adequate design and implementation of effective action plans to follow up, investigate and address prior year audit findings that led to negative audit outcomes for procurement and contract management for the past three audits. This resulted in not all prior year audit findings being investigated and remediated timeously to act as a deterrent for future possible non-compliances as there has not been notable progress in addressing the prior year audit findings. This is evidenced in management’s reporting on the prior year audit findings status and progress at year end. We reported a similar control deficiency in the past two years due to the high number of prior year limitations not being investigated and remediated by management. Management do not have adequate controls in place to ensure that complete and accurate procurement and contract management registers are maintained and readily available for audit purposes. Significant errors were identified resulting in management having to rework the registers for accuracy and completeness. This contributed to delays in the submission of the registers impacting the audit process. An increased number of errors were identified in the current year when compared to the prior year. Management did not design and implement adequate controls to ensure that, in accordance with the appropriate legislative requirements, the bids of the winning suppliers were received on or before the closing date and time determined for the bid. As a result, we could not confirm whether any of the tenders awarded were received from the winning bidders who submitted their bids on or before the closing date and time advertised to the public. We reported a similar control deficiency in the prior year. At business unit level, internal controls were ineffective and year-end adjustments and reconciliations were not adequately reviewed, leading to material audit adjustments. The inconsistent application of IT controls undermined the reliability, ongoing availability, accuracy, and security of information systems. ABC 34 Management did not implement adequate internal controls for the systematic collection of supporting evidence substantiating the validity of reported results from all savings initiatives. In addition, ineffective review controls exist in that numerous inaccuracies and errors were identified as part of the external audit process after the reported results were disclosed to the Shareholder. We further noted inadequate documentation of applied judgments in the establishment of an approved baseline for measuring savings. This resulted in the material finding included in the audit of the annual performance report. Management did not implement adequate internal controls for the systematic collection of supporting evidence in support of the submission of completed security clearance assessments documentation for further processing by the State Security Agency of South Africa during the full year. The documentation control deficiencies were limited to the quarter one and quarter two reported performance and resulted in the material finding included in the audit of the annual performance report. The accounting authority did not exercise adequate oversight in the development and approval of the annual shareholder compact to ensure that the compact is sufficiently complete to prioritise relevant core functions of its mandate. Performance indicators specific to Distribution plant maintenance, strengthening and expansion has been omitted from the approved plans and have been included in the Report as a material missing indicator. Other reports We draw attention to the following engagements conducted by various parties which had, or could have, an impact on the matters reported in the consolidated and separate financial statements, reported performance information, compliance with applicable legislation and other related matters. These reports did not form part of our opinion on the financial statements or our findings on the reported performance information or compliance with legislation. Matters under investigation During the financial year under review, both regulatory authorities and the accounting authority undertook investigations into alleged irregularities, fraud, and corruption within the procurement function, capital projects, prepaid revenue, and other areas of the entity. Furthermore, internal and external investigations highlighted findings of maladministration related to supply chain management, improper conduct, and manipulation within the prepaid revenue environment, as well as matters linked to state capture that have been reported to the accounting authority. The sophisticated and complex nature of these fraud schemes has prolonged the investigation process, resulting in a backlog of cases requiring further examination. To support these efforts, the directors have engaged forensic firms to assist with the investigations. Additionally, Presidential proclamations have mandated investigations into alleged maladministration, improper or unlawful conduct by employees, officials, or agents, and the unlawful appropriation or expenditure of public funds or property. These investigations are being conducted by the Special Investigating Unit. As at the reporting date, these investigations are ongoing, and we are unable to determine the potential impact of their outcomes on the consolidated and separate financial statements. Further details regarding the recognition, measurement, and disclosure of investigations can be found in accounting policies note 2.4 and note 45. Limited assurance and agreed upon procedures engagements At the date of this report, we have commenced/completed the following engagements: • Agreed upon procedures on net sent out power megawatt hours, gross sent out power megawatt hours and actual sent out power production figures to NERSA for the year ended 31 December 2024. The report was issued to the accounting authority on 25 April 2025. • Agreed upon procedures on the group’s generation, transmission and distribution activities regulatory financial report as issued to NERSA. The report was issued to the accounting authority on 18 March 2025. • Assurance engagement on the 2022 greenhouse gas emissions results submitted reported to the Department of Forestry, Fisheries and the Environment as part of the National Greenhouse Gas Emission Reporting Regulations. The report was issued to the accounting authority on 30 May 2025. • Agreed upon procedures on the Home Loan and Mortgage Disclosure Act 63 of 2000, Annual Return Form of Eskom Finance Company SOC Ltd. The report was issued to the accounting authority on 23 May 2025. • Agreed upon procedures Reports on National Credit Regulator Annual Financial Statement Return (Form 40) for Eskom Finance Company SOC Ltd. The report was issued on 17 March 2025. • Agreed upon procedures for Escap SOC Ltd on the Schedule of Collection and Remission of Premiums to South African Special Risk Insurance Association SOC Limited (SASRIA). The report covered the period from 1 April 2024 to 31 March 2025, and the report was issued to SASRIA on 13 June 2025. • Agreed upon procedures for Escap SOC Ltd on the regulatory return in compliance with the Insurance Act 18 of 2017 to the Prudential Authority for the year ended 31 March 2025. This report was issued on 31 July 2025. • Agreed upon procedures in National Transmission Company South Africa on agreeing certain information within the draft Shareholder Reports to the underlying financial records for the quarters ended 30 September 2024 and 31 December 2024. The reports were issued to the National Transmission Company South Africa board of directors on 21 February 2025 and 31 March 2025 respectively. • Agreed upon procedures reports on the short-term incentive for the year ended 31 March 2025. The reports were issued to the accounting authority on 18 and 19 September 2025. • Assurance engagement on the sustainability reporting as included in the 2024/25 Integrated Report. The report will be issued to the accounting authority on the same date as this report. Auditor tenure In terms of the IRBA rule published in Government gazette number 39475 dated 4 December 2015, we report that Deloitte & Touche has been the auditor of Eskom Holdings SOC Ltd for four years. Deloitte & Touche Registered Auditor Per: André J. Dennis Partner 29 September 2025 5 Magwa Crescent Waterfall City Waterfall 2090 ABC 35 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Annexure to the auditor’s report The annexure includes the following: • The auditor’s responsibility for the audit; and • The selected legislative requirements for compliance testing. Auditor’s responsibility for the audit Professional judgement and professional scepticism As part of an audit in accordance with the ISAs, we exercise professional judgement and maintain professional scepticism throughout our audit of the consolidated and separate financial statements, and the procedures performed on the reported performance information for selected key performance areas and on the public entity’s compliance with selected requirements in key legislation. Financial statements In addition to our responsibility for the audit of the consolidated and separate financial statements as described in this auditor’s report, we also: • identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • obtain an understanding of internal control relevant to the audit 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 public entity’s internal control. • evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made. • conclude on the appropriateness of the accounting authority’s use of the going concern basis of accounting in the preparation of the financial statements. We also conclude, based on the audit evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the ability of the public entity and its subsidiaries to continue as a going-concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements about the material uncertainty or, if such disclosures are inadequate, to modify our opinion on the consolidated and separate financial statements. Our conclusions are based on the information available to us at the date of this auditor’s report. However, future events or conditions may cause a public entity to cease operating as a going concern. • evaluate the overall presentation, structure, and content of the consolidated and separate financial statements, including the disclosures, and determine whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion. Communication with those charged with governance We communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the accounting authority with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to have a bearing on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore key audit matters. We describe these matters in this auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in this auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest of such communication. ABC 36 Compliance with legislation The list of selected legislative requirements are as follows: Selected legislation and regulations Consolidated firm level requirements Public Finance Management Act No.1 of 1999 (PFMA) Section 50(3); 50(3)(a); 50(3)(b) Section 51(1)(a)(iii); 51(1)(b)(i); 51(1)(b)(ii); 51(1)(e)(iii) Section 52(b) Section 54(2)(c); 54(2)(d) Section 55(1)(a); 55(1)(b); 55(1)(c)(i) Section 56 Section 57(b); 57(d) Section 66(3)(a) Treasury Regulations for departments, trading entities, constitutional Regulation 29.1.1; 29.1.1(a); 29.1.1(c); 29.2.1; 29.2.2; 29.3.1 institutions and public entities Regulation 31.2.5; 31.2.7(a); Regulation 33.1.1; 33.1.3 Companies Act No.71 of 2008 Section 30(3)(b)(i); 33(1)(a) Section 45(3)(a)(ii); 45(3)(b)(i); 45(3)(b)(ii); 45(4) Section 46(1)(a); 46(1)(b); 46(1)(c) Section 72(4)(a) Section 75(6) Section 86(1); 86(4) Section 88(2)(d) Section 112(2)(a) Section 129(7) Prevention and Combating of Corrupt Activities Act No.12 of 2004 Section 34(1) Companies Regulations Regulation 30(2); 43(2)(a) Construction Industry Development Board Act No.38 of 2000 Section 18(1) Construction Industry Development Board Regulations, 2004 Regulation 17; Section 25(7A) Second amendment National Treasury Instruction no. 5 of 2020/21 Paragraph 1 National Treasury Instruction No. 5 of 2020/21 Paragraph 2; 4.8; 4.9; 5.3 National Treasury Instruction No. 4 of 2015/16 Paragraph 3.4 National Treasury Instruction No. 3 of 2020/21 Paragraph 4.2 National Treasury Instruction No. 11 of 2020/21 Paragraph 3.1; 3.4(b); 3.9 Preferential Procurement Policy Framework Act 5 of 2000 Section 1; 2.1(a); 2.1(f ) Preferential Procurement Regulations, 2022 Paragraph 4.1; 4.2; 4.3; 4.4; 5.1; 5.2; 5.3; 5.4 Preferential Procurement Regulations, 2017 Regulation 4.1; 4.2 Regulation 5.1; 5.3; 5.6; 5.7 Regulation 6.1; 6.2; 6.3; 6.5; 6.6; 6.8 Regulation 7.1; 7.2; 7.3; 7.5; 7.6; 7.8 Regulation 8.2; 8.5 Regulation 9.1 Regulation 10.1; 10.2 Regulation 11.1; 11.2 ABC 37 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Statements of financial position at 31 March 2025 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Assets Non-current 744 546 750 872 712 966 720 243 Property, plant and equipment 8 685 986 680 950 602 758 603 093 Intangible assets 9 3 570 3 438 890 816 Future fuel supplies 10 7 639 6 782 7 639 6 782 Investment in equity-accounted investees 11 346 346 95 95 Investment in subsidiaries 12 – – 27 057 22 697 Inventories 13 15 373 13 297 15 373 13 297 Deferred tax 14 7 81 – – Loans receivable 15 1 583 7 565 31 934 36 815 Embedded derivatives 16 3 847 10 486 3 847 10 486 Derivatives held for risk management 17 13 320 18 881 13 320 18 881 Finance lease receivables 18 138 174 89 109 Payments made in advance 19 1 729 1 793 1 817 1 792 Trade and other receivables 20 4 977 4 031 5 509 4 356 Investments 21 6 031 3 048 2 638 1 024 Current 159 474 115 450 162 559 99 995 Inventories 13 31 084 28 293 30 685 27 972 Taxation 177 11 – – Loans receivable 15 309 208 7 467 2 610 Embedded derivatives 16 125 1 315 125 1 315 Derivatives held for risk management 17 2 025 8 135 2 075 8 162 Finance lease receivables 18 36 37 3 22 Payments made in advance 19 1 109 1 413 968 1 299 Trade and other receivables 20 41 923 35 975 58 479 35 650 Investments 21 18 925 16 478 – – Cash and cash equivalents 22 63 761 23 585 62 757 22 965 Assets held-for-sale 23 7 811 – – – Total assets 911 831 866 322 875 525 820 238 Equity Capital and reserves 278 345 222 858 227 420 200 312 Liabilities Non-current 478 009 486 657 460 620 469 393 Debt securities and borrowings 25 351 226 359 692 356 204 363 992 Derivatives held for risk management 17 836 27 836 27 Deferred tax 14 11 389 10 412 – – Payments received in advance 26 6 529 5 013 3 670 2 478 Contract liabilities and deferred income 26 34 041 34 687 32 985 33 688 Employee benefit obligations 27 19 672 17 448 18 237 16 236 Provisions 28 47 447 52 561 47 447 52 561 Lease liabilities 29 6 598 6 553 993 252 Trade and other payables 30 271 264 248 159 Current 154 871 156 807 187 485 150 533 Debt securities and borrowings 25 21 429 52 508 42 470 56 293 Loan from shareholder 31 56 132 32 000 56 132 32 000 Derivatives held for risk management 17 811 566 829 566 Payments received in advance 26 3 636 4 300 3 404 4 158 Contract liabilities and deferred income 26 3 824 3 684 3 775 3 645 Employee benefit obligations 27 7 584 3 777 6 108 3 130 Provisions 28 5 829 9 325 5 538 9 177 Lease liabilities 29 1 112 850 118 61 Trade and other payables 30 54 040 49 664 69 111 41 503 Taxation 474 133 – – Liabilities held-for-sale 23 606 – – – Total liabilities 633 486 643 464 648 105 619 926 Total equity and liabilities 911 831 866 322 875 525 820 238 ABC 38 Income statements for the year ended 31 March 2025 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Revenue 32 340 895 295 814 319 666 295 814 Other income 33 3 265 1 295 4 752 3 046 Primary energy 34 (150 207) (173 729) (171 731) (173 729) Employee benefit expense 35 (43 160) (35 096) (33 420) (30 967) Impairment of financial assets 36 (7 317) (3 017) (7 621) (3 080) Impairment and write down of other assets 36 (299) (416) (294) (414) Other expenses 37 (44 139) (41 441) (49 501) (47 937) Profit before depreciation and amortisation expense and net fair value and foreign exchange (loss)/gain (EBITDA) 99 038 43 410 61 851 42 733 Depreciation and amortisation expense 38 (31 764) (33 239) (29 179) (33 310) Net fair value and foreign exchange (loss)/gain 39 (10 415) 2 644 (10 483) 2 668 Profit before net finance cost and share of profit of equity-accounted investees 56 859 12 815 22 189 12 091 Net finance cost (33 092) (38 389) (34 293) (40 590) Finance income 40 6 840 4 859 8 159 2 989 Finance cost 41 (39 932) (43 248) (42 452) (43 579) Share of profit of equity-accounted investees after tax 11 102 105 – – Profit/(loss) before tax 23 869 (25 469) (12 104) (28 499) Income tax 42 (7 822) (29 546) (213) (28 585) Profit/(loss) for the year1 16 047 (55 015) (12 317) (57 084) Statements of comprehensive income for the year ended 31 March 2025 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Profit/(loss) for the year1 16 047 (55 015) (12 317) (57 084) Other comprehensive loss (560) (71) (575) (96) Items that may be reclassified subsequently to profit or loss 226 (527) 226 (533) Cash flow hedges Changes in fair value 17 1 781 (493) 1 781 (493) Net amount transferred to profit or loss (1 278) (34) (1 278) (34) Amortisation of effective portion of terminated cash flow hedges 39 – 3 – 3 Ineffective portion of cash flow hedges 39 (1 278) (37) (1 278) (37) Net amount transferred to initial carrying amount of hedged items (193) (203) (193) (203) Foreign currency translation differences on foreign operations – 6 – – Income tax thereon 42 (84) 197 (84) 197 Items that may not be reclassified subsequently to profit or loss (786) 456 (801) 437 Remeasurement of benefits 27 (1 077) 625 (1 098) 601 Income tax thereon 42 291 (169) 297 (164) Total comprehensive profit/(loss) for the year1 15 487 (55 086) (12 892) (57 180) 1. A nominal amount is attributable to the non-controlling interest in the group. The remainder is attributable to the owner of the company. ABC 39 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Statements of changes in equity for the year ended 31 March 2025 Share Other Cash flow Unrealised Foreign Accumulated Total capital capital hedge fair value currency profit/(loss) equity reserve reserve translation reserve Rm Rm Rm Rm Rm Rm Rm Group Balance at 31 March 2023 241 550 – (335) (12 757) 47 5 439 233 944 Loss for the year – – – – – (55 015) (55 015) Other comprehensive (loss)/income, net of tax – – (533) – 6 456 (71) Conversion of loan from shareholder – 44 000 – – – – 44 000 Transfers between reserves – – – 2 444 – (2 444) – Balance at 31 March 2024 241 550 44 000 (868) (10 313) 53 (51 564) 222 858 Profit for the year – – – – – 16 047 16 047 Other comprehensive income/(loss), net of tax – – 226 – – (786) (560) Share capital issued 76 000 (44 000) – – – – 32 000 Conversion of loan from shareholder – 8 000 – – – – 8 000 Transfers between reserves – – – 2 627 – (2 627) – Balance at 31 March 2025 317 550 8 000 (642) (7 686) 53 (38 930) 278 345 Company Balance at 31 March 2023 241 550 – (335) (12 757) – (14 966) 213 492 Loss for the year – – – – – (57 084) (57 084) Other comprehensive (loss)/income, net of tax – – (533) – – 437 (96) Conversion of loan from shareholder – 44 000 – – – – 44 000 Transfers between reserves – – – 2 444 – (2 444) – Balance at 31 March 2024 241 550 44 000 (868) (10 313) – (74 057) 200 312 Loss for the year – – – – – (12 317) (12 317) Other comprehensive income/(loss), net of tax – – 226 – – (801) (575) Share capital issued 76 000 (44 000) – – – – 32 000 Conversion of loan from shareholder – 8 000 – – – – 8 000 Transfers between reserves – – – 2 627 – (2 627) – Balance at 31 March 2025 317 550 8 000 (642) (7 686) – (89 802) 227 420 Share capital Refer to note 24 for details regarding share capital. Other capital Other capital comprises the portions of the loan from the shareholder that were approved for conversion to equity by the Minister of Finance prior to the reporting date and where the share certificates were only issued after the reporting date. Refer to note 48. Cash flow hedge reserve The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments (forward exchange contracts and cross-currency swaps) related to hedged transactions that have not yet occurred. The cross-currency swap hedges foreign exchange rate and interest rate risk of the future interest payments and the principal repayment on bonds and loans (denominated in US dollar, euro and Chinese yuan). Unrealised fair value reserve The cumulative net change in the fair value of financial instruments that have not been designated as cash flow hedging instruments is recognised in profit/ (loss). The unrealised portion of the net change in fair value is not distributable and has been reallocated from a distributable reserve (accumulated profit) to a non-distributable reserve. Foreign currency translation reserve The foreign currency translation reserve comprises exchange differences resulting from the translation of the results and financial position of foreign operations. Accumulated profit/(loss) Accumulated profit/(loss) is the amount of cumulative profit/(loss) retained in the business after tax. No dividend has been proposed in the current or prior year. There are no restrictions on the distribution of dividends. Non-controlling interest The group does not have any subsidiaries with a material non-controlling interest. ABC 40 Statements of cash flows for the year ended 31 March 2025 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Cash flows from operating activities Cash generated from operations 43 93 366 40 515 60 604 39 912 Net cash from derivatives held for risk management (1 436) 794 (1 256) 789 Finance income received 441 412 395 412 Finance cost paid (26) (4) (4) (4) Income taxes paid (6 400) (1 321) – – 85 945 40 396 59 739 41 109 Cash flows used in investing activities Disposals of property, plant and equipment 292 1 082 304 1 076 Acquisitions of property, plant and equipment (39 832) (42 492) (33 637) (42 339) Acquisitions of intangible assets (157) (85) (97) (84) Acquisitions of future fuel supplies (3 388) (2 857) (3 388) (2 857) Acquisitions of investments in subsidiaries – – (4 360) (116) Acquisitions of treasury investments (1 397) (1 002) (1 397) (1 002) Disposals of insurance investments 26 133 25 560 – – Acquisitions of insurance investments (29 375) (27 295) – – Payments made in advance (18) (101) (18) (101) Cash used in provisions (216) (135) (216) (135) Net cash from/(used in) derivatives held for risk management 35 (221) 35 (221) Loans receivable repaid 1 759 703 3 793 50 Loans receivable advanced (741) (640) (500) – Cash from finance lease receivables 37 21 39 21 Dividends received 72 74 102 889 Dividends received – investment in equity-accounted investees 11 102 109 – – Finance income received 2 321 2 336 3 673 496 (44 373) (44 943) (35 667) (44 323) Cash flows (used in)/from financing activities Debt securities and borrowings raised 44 8 683 23 562 24 240 23 561 Loan from shareholder raised 44 64 000 76 000 64 000 76 000 Payments made in advance 44 (131) (426) (131) (426) Debt securities and borrowings repaid 44 (46 424) (54 594) (46 309) (54 550) Net cash from derivatives held for risk management 44 4 555 10 992 4 555 10 992 Cash used in lease liabilities 44 (783) (721) (49) (638) Finance income received 2 217 1 110 2 211 1 030 Finance cost paid (33 364) (35 255) (32 676) (35 564) Taxes paid (60) (71) (58) (71) (1 307) 20 597 15 783 20 334 Net increase in cash and cash equivalents 40 265 16 050 39 855 17 120 Cash and cash equivalents at beginning of the year 23 585 7 516 22 965 5 832 Foreign currency translation – 6 – – Effect of movements in exchange rates on cash held (63) 13 (63) 13 Assets and liabilities held-for-sale (26) – – – Cash and cash equivalents at end of the year 22 63 761 23 585 62 757 22 965 Cash flow allocation Cash flows that form part of the changes in the line items of the statements of financial position are classified into operating, investing and financing activities in a manner that is most appropriate to the group. As a result, the cash flows associated with some line items in the statements of financial position may be split into multiple cash flow activities in the statement of cash flows. These line items are: Derivatives held for risk management Derivatives held for risk management are classified as operating, investing or financing activities based on the allocation of the cash flows of the underlying hedged item. Refer to note 17. Payments made in advance Payments made in advance that relate to the raising of debt securities and borrowings are classified as financing activities. Payments related to the acquisition of property, plant and equipment and intangible assets are allocated to investing activities. All other payments made in advance are deemed operational in nature and are therefore included within operating activities. Refer to note 19. Provisions Cash flows related to provisions for compensation events where the cost of property, plant and equipment includes these costs, are classified as investing activities. All other provisions are operational in nature and are classified as operating activities. Refer to note 28. Finance income and costs Finance income and costs are allocated in line with the allocation of the related balances on which the income or cost arose. The interest income classified as financing activities was earned incidental to the financing activities and has thus been classified as such in the statements of cash flows. ABC 41 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements for the year ended 31 March 2025 1. General information Eskom Holdings SOC Ltd (Eskom), a state-owned company and holding company of the group, is incorporated and domiciled in the Republic of South Africa. The group is wholly owned by the government with the Minister of Electricity and Energy as the shareholder representative. The principal activity of the group is the vertically integrated regulated electricity business (Eskom and National Transmission Company South Africa SOC Ltd (NTCSA)) that generates, transmits and distributes electricity to local industrial, mining, commercial, agricultural, redistributor (metropolitan and other municipalities) and residential customers, and to international customers in southern Africa. The group also purchases electricity from IPPs and international suppliers in southern Africa. The primary business focus of the other subsidiaries is to support the electricity business. The business nature of the significant operating subsidiaries is set out in note 12. 2. Summary of material accounting policies The accounting policies applied in the preparation of these separate and consolidated financial statements are set out below. 2.1 Basis of preparation and measurement Statement of compliance The consolidated financial statements of Eskom Holdings SOC Ltd at and for the year ended 31 March 2025 comprise the Eskom company, its subsidiaries, joint ventures, associates and structured entities (together the group). The separate and consolidated financial statements have been prepared in accordance with IFRS Accounting Standards and in the manner required by the PFMA and the Companies Act. The financial statements have been prepared on the going-concern basis and were approved for issue by the board on 29 September 2025. Basis of measurement The separate and consolidated financial statements are prepared on the historical-cost basis except for the following items which are measured at fair value: • derivatives held for risk management • embedded derivatives • certain other investments Functional and presentation currency The separate and consolidated financial statements are presented in South African rand (rounded to the nearest million unless otherwise stated), which is the company’s functional currency and the presentation currency of the group. Changes in accounting policies The group has consistently applied the accounting policies to all periods presented in these consolidated financial statements except for new or revised statements and interpretations implemented during the year. The nature and effect of new standards and interpretations are discussed in note 50.2. 2.2 Consolidation Subsidiaries Subsidiaries are consolidated from the date on which control is transferred to the group until the date that control ceases. Investments in subsidiaries are accounted for at cost less impairment losses in the separate financial statements of the company. When the group ceases to have control of an entity, it derecognises the assets and liabilities of the subsidiary and any components of equity. Any resulting gain or loss is recognised in profit or loss. Common control transactions are accounted for at carrying value in the consolidated and separate financial statements where the acquirer recognises the acquired assets and liabilities at the carrying values reflected in the financial statements of the transferring entity (Eskom company). The transferring entity recognises the net carrying value of the assets and liabilities transferred as its investment in the subsidiary and the acquirer recognises the same value as equity in their respective financial statements. Any difference between the acquisition consideration and the net carrying value of the assets and liabilities that form part of the common control transaction is recognised in the respective financial statements as part of the investment in the subsidiary by the transferring entity and as equity by the acquirer. The accounting policies of the subsidiaries have been adjusted, where necessary, to ensure consistency with the policies adopted by the group. Investment in equity-accounted investees Investments in equity-accounted investees (associates and joint ventures) are accounted for at cost less impairment losses in the separate financial statements of the company and on the equity method of accounting in the consolidated financial statements. The group’s share of post-acquisition profits or losses of these investments is recognised in profit or loss within share of profit of equity-accounted investees. The cumulative post-acquisition movements, including dividends received, are adjusted against the carrying amount of the investment. Accounting policies of associates and joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the group. If the financial statements of the associate or joint venture were prepared as of a different date to that of the group (maximum of three months difference), adjustments were made to the group financial statements for significant transactions and events that occurred between the date of the financial statements of the associate or joint venture and the date of the financial statements of the group. ABC 42 2.3 Foreign currency translation Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when recognised in other comprehensive income for qualifying cash flow hedges. Non-monetary items measured at historical cost are translated at the exchange rate on transaction date. Foreign loans are initially recognised at the exchange rate prevailing at transaction date and are translated at spot rate at every reporting date. Foreign exchange gains and losses that relate to financial assets and liabilities at amortised cost are presented in profit or loss within net fair value and foreign exchange gain/loss. 2.4 Property, plant and equipment Recognition and measurement Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost includes environmental rehabilitation costs, borrowing costs and transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency transactions. Assets under construction includes the cost of materials and direct labour and any other directly attributable costs incurred in bringing an item of property, plant and equipment to its present location and condition. Significant parts of an item of property, plant and equipment that have different useful lives are accounted for as separate items (major components). Spare parts classified as strategic and critical spares are recognised as property, plant and equipment and are only capable of operating in the manner intended by management when they are installed. Items of property, plant and equipment transferred from customers are initially recognised at fair value in accordance with IAS 16 Property, Plant and Equipment and any related revenue is recognised in accordance with IFRS 15 Revenue from Contracts with Customers, within revenue. Subsequent costs are capitalised only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. When part of an asset is being replaced, the carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the financial period incurred. Owned land and spare parts are not depreciated. Depreciation on other owned assets is calculated using the straight-line method to allocate cost over the estimated useful lives (limited to residual values). Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful life of the assets. The useful lives of owned and right-of-use assets are as follows: Owned Right-of-use Years Years Buildings and facilities 8 to 40 2 to 5 Plant • Generating 3 to 80 10 to 15 • Transmitting 5 to 50 n/a • Distributing 5 to 80 n/a • Other 10 to 40 16 to 22 Equipment and vehicles 3 to 45 2 The depreciation method, residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each reporting date. The estimation of the useful lives and residual values of property, plant and equipment is an area of judgement. The estimation is based on professional judgement and independent expert opinion, where available, considering historical performance, the circumstances and operating environment in which the assets operate, alignment to industry benchmarks as well as expectations about the future. Gains or losses on the disposal or write-off of an item of property, plant and equipment are recognised in profit or loss within other income or other expenses. Projects in assets under construction that have been discontinued are written off and included in other expenses. Investigations into possible corruption and related impact on capital projects Eskom acknowledges that there is evidence that its control environment to ensure that capital contracts were awarded appropriately, subsequent changes and amendments were valid and that value was received have not operated effectively and that remediation of such control deficiencies is ongoing. Several contracts and contract amendments have been highlighted by the Zondo Commission, SIU and other internal and external mechanisms. Matters that are under investigation include: • contracts being irregularly awarded • non-compliance with contractual terms in submitting claims • modifications to contracts where the value added to Eskom is questionable Eskom is mostly reliant on the SIU who has the requisite knowledge and access to systems and data to evaluate and investigate these complex transactions and the consequential effects thereof. Eskom does not have access to the SIU investigations and related progress as the details are only made available to Eskom once an investigation is finalised. The outcomes of these SIU and other internal investigations are assessed once finalised and, if required, an adjustment is made to the carrying value of the related assets. The investigations are complex and determining the correct accounting implications for these possible irregularities that cover an extended period of time presents a key judgement. A receivable is only raised for a recovery of an overpayment when the realisation of the income is probable and included as other income in profit or loss. Internal investigations into corruption and maladministration are completed from time-to-time and where wasteful, fruitless and fraudulent expenditure is identified, these are expensed and the carrying value of the related asset reduced. These write-offs will have an impact on the EBITDA at the time of recognition but are non-cash in nature. ABC 43 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.5 Intangible assets Research and development Research expenditure is recognised as an expense as incurred. Development expenditure (relating to the design and testing of new or improved products) is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the group intends to, and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss within other expenses as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Development costs previously capitalised that have been discontinued are written off and included in other expenses. Capitalised development costs are amortised from the point at which the asset is ready for use on a straight-line basis over its useful life. Subsequent to initial recognition, the capitalised development costs are measured at cost less accumulated amortisation and impairment losses. Rights Rights consist mainly of servitudes and rights of way under power lines. A servitude right is granted to the group for an indefinite period (useful life) and is therefore not amortised. Computer software Computer software and licences acquired have a finite useful life and are measured at cost less accumulated amortisation and any accumulated impairment losses. If software is integral to the functionality of related equipment, it is capitalised as part of the equipment. Costs associated with the support and maintenance of computer software programmes are recognised as an expense as incurred. Amortisation is calculated using the straight-line method to allocate costs over the estimated useful lives of software of between 3 and 10 years. Amortisation methods and useful lives of assets are reviewed at each reporting date and adjusted if appropriate. 2.6 Impairment of non-financial assets The carrying amounts of non-financial assets within the scope of IAS 36 Impairment of Assets are assessed at each reporting date to determine whether there is any indication of impairment. These assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or if there are indicators of impairment. Assets that have an indefinite useful life (rights) are tested annually for impairment. The group’s assets are grouped at the smallest identifiable group of assets (CGUs) that generate cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The identification of CGUs involves judgement. The core operating assets of the group (generation (Eskom), transmission (NTCSA) and distribution (Eskom) segments) as well as ERI (included in all other segments) function together to deliver electricity and generate revenue from the sale of electricity to external customers in South Africa. The end product is the sale of electricity generated, transmitted and distributed through the vertically integrated regulated electricity business operations at a single exit price as approved by NERSA. NERSA approves a revenue allocation for each licensed part of Eskom (generation, NTCSA and distribution) based on a MYPD. NERSA then approves an annual electricity price (tariff ) at an Eskom level (generation, NTCSA and distribution) which translates into a percentage increase that culminates into a c/kWh price for electricity (electricity tariff ) charged to the end customer. Revenue is recognised in accordance with contractual agreements between segments through internal transfer pricing that is based on NERSA methodology principles and the objectives of the South African Grid Code and Transmission Tariff Code (Grid Code). Some limited capacity in the grid is sold by NTCSA to international customers in southern Africa. Eskom company (generation and distribution segments), NTCSA (transmission segment) and ERI, have been identified as a single CGU (referred to as the Eskom CGU). This is on the basis that Eskom currently remains a vertically integrated regulated business and the various segments across the electricity supply chain are not capable of generating cash inflows independently. The identification of Eskom company, NTCSA and ERI as a single CGU may be impacted in the future by the planned legal separation of the generation and distribution divisions into separate operational legal entities and when the separate legal entities (or some of the legal entities in the vertically integrated electricity business) are fully operational in terms of their individual mandates with unregulated pricing structures for each licensee, alternative transmission infrastructure (network assets) exist and there is sufficient generation capacity to allow for a truly independent market structure. The above may be possible when an active market exists where the market operator (currently fulfilled by NTCSA in the interim) can trade independently and generate independent cashflows through the buying and selling of electricity with external customers outside the vertically integrated electricity business at unregulated electricity prices. This is dependent on the development, approval and implementation of the market operator licence, market code, rules and trading platform (systems) for the market operator, which is expected to take some time to finalise as required (uncertainties relating to detail and timing), as well as the establishment of an alternative transmission infrastructure (network assets) and an unregulated pricing structure for each licensee. The individual licensees will only be able to generate independent cashflows when the market operator is fully operational and unregulated electricity tariff structures are in place, even if NERSA approves separate electricity tariffs per licensee. An impairment loss is recognised for the amount by which the asset’s (or CGU’s) carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs of disposal and value in use. The fair value less cost of disposal is determined using a cost-based methodology, referred to as the depreciated replacement cost (DRC) method calculated as a proxy to assess impairment. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. Non-financial assets that were subject to impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment losses or reversals are recognised in profit or loss within net impairment and write down of other assets. ABC 44 2.7 Capitalisation of borrowing costs Borrowing costs attributable to the construction of qualifying assets are capitalised as part of the cost of these assets over the period of construction, until the asset is substantially ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs for qualifying assets financed by specific borrowings are capitalised using the actual interest expense incurred. Borrowing costs for qualifying assets not financed by specific borrowings are capitalised at the weighted average of the borrowing costs (capitalisation rate) using the borrowings applicable to the entity in the group. 2.8 Leases The group assesses at contract inception whether a contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lessee accounting The group recognises right-of-use assets relating to the right to use the underlying assets and lease liabilities for the lease payments except for short- term leases and leases of low-value assets, where the recognition exemption is applied. Right-of-use assets The group recognises a right-of-use asset at lease commencement (the date the underlying asset is available for use). Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date. Refer to note 2.4 for details regarding the depreciation of right-of-use assets and to note 2.6 regarding assessment for impairment of right-of-use assets. Lease liabilities The group recognises a lease liability at the commencement of a lease at the present value of the lease payments that must be made over the lease term. The lease payments include fixed payments and variable payments dependent on an index or rate. The group uses the incremental borrowing rate at lease commencement to calculate the present value of lease payments if the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate requires a degree of judgement regarding the determination of an appropriate discount rate for the lease term and is based on borrowings of a similar term which considers current market conditions. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and is reduced for lease payments made. The carrying amount of lease liabilities is remeasured to reflect any reassessment, lease modification or a change of the in substance fixed lease payments. Short-term leases and leases of low-value assets The group applies the short-term lease recognition exemption to leases with a term of less than 12 months. The group also applies the lease of low- value assets recognition exemption to leases with a value of less than R75 000. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. Lessor accounting Finance leases Finance lease receivables mainly comprise premium power supply equipment contracts. The present value of the lease payments is recognised as a receivable when property, plant and equipment are leased out under a finance lease. The difference between the gross receivable and the present value of the receivable is disclosed as unearned finance income within finance lease receivables. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return. Finance lease receivables are assessed for impairment and derecognised in accordance with the requirements for financial assets. Operating leases Leases where substantially all of the risks and rewards of ownership are not transferred are classified as operating leases. Payments received under operating leases are recognised in profit or loss within other income on a straight-line basis over the period of the lease. 2.9 Payments made in advance Securing debt raised Payments are made in advance to lenders for the commitment and issuing fees incurred in raising debt. Environmental rehabilitation trust fund Contributions were made by Eskom to environmental rehabilitation trust funds that were established to fund the financial obligation in respect of the rehabilitation of certain coal mines from which Eskom sources its coal for the generation of electricity. The trust funds are controlled by third parties and will be used solely for the environmental rehabilitation of the relevant coal mines. The contributions made to the trust funds are recognised separately from the environmental rehabilitation provision in accordance with the requirements of IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds. Changes in the carrying amount of the trust funds are recognised in profit or loss within other income. Other Other payments made in advance comprise mainly payments made to suppliers to reserve manufacturing capacity and resources for the future construction of assets as well as for support and maintenance of IT infrastructure. These amounts will be used as partial settlement towards the future amounts payable to the suppliers. There are various remedies in place, including performance bonds, early cancellation penalties and guarantees, that can be used to recover outstanding payments in advance in the event of default or non-performance. ABC 45 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.10 Financial instruments 2.10.1 Financial assets (excluding derivatives) Classification The appropriate classification of a financial asset is determined on acquisition of the financial asset and is based on: • whether the contractual terms of the financial asset gives rise to contractual cash flows that are solely payments of principal and interest • the objective of the business model in which the financial asset is held at a portfolio level that best reflects the way the business is managed Financial assets are not reclassified subsequent to their initial recognition unless the group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. Financial assets are classified into the following categories: Amortised cost A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at fair value through profit or loss: • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding • it is held within a business model whose objective is to hold assets to collect contractual cash flows Fair value through profit or loss All financial assets not classified as measured at amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss. Measurement Initial recognition Financial assets are initially measured at fair value on the date of commitment to purchase (trade date). The transaction price is generally the best indicator of fair value. If a contract with a customer has a significant financing component, the related financial asset is initially measured at the transaction price excluding the time value of money. Where the fair value of a financial asset is different to the transaction price, a day-one gain or loss may arise. If the fair value has been determined based on market-observable data the whole day-one gain or loss is recognised immediately in profit or loss. If the fair value has not been based on market- observable data, the day-one gain or loss is deferred in the statements of financial position and amortised over the term of the instrument in profit or loss. Any directly attributable transaction costs are included in the initial measurement of financial assets except for financial assets at fair value through profit or loss where directly attributable transaction costs are recognised in profit or loss. Purchased or originated credit impaired assets are financial assets that are credit impaired on initial recognition. These assets are recognised at fair value reflecting the credit risk at acquisition and are subsequently measured at amortised cost using a credit-adjusted effective interest rate. Purchased or originated credit impaired assets are excluded from the general three-stage expected credit loss (ECL) model. Lifetime expected credit losses are embedded in the measurement of the asset through the credit-adjusted effective interest rate. Cumulative changes in the lifetime expected credit losses since initial recognition are recognised as a loss allowance or gain in profit or loss. After initial recognition Amortised cost Financial assets at amortised cost are measured at amortised cost after initial recognition using the effective interest rate method less any accumulated impairment losses. Interest income, foreign exchange gains and losses and impairments are recognised in profit or loss. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. Fair value through other comprehensive income Financial assets at fair value through other comprehensive income are measured at fair value after initial recognition. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairments are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. Fair value through profit or loss Financial assets at fair value through profit or loss are measured at fair value after initial recognition. Changes in the fair value after initial recognition (including any interest or dividend income) are recognised in profit or loss. Impairment Loss allowances are recognised for expected credit losses on financial assets measured at amortised cost or fair value through other comprehensive income. Loss allowances are calculated using the general or simplified approach. The general approach requires impairment to be measured using a 12-month or lifetime expected credit loss. The lifetime expected credit loss method will be used if, after initial recognition, there is a significant increase in the credit risk of a financial asset or if it becomes credit impaired. The simplified approach requires impairment to be measured using a lifetime expected credit loss and is applied to trade and other receivables. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the group is exposed to credit risk. The 12-month expected credit losses are the portion of the expected credit loss resulting from default events that are possible within 12 months after reporting date (or a shorter period if the expected life of the instrument is less than 12 months). Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the financial instrument. Expected credit losses are probability-weighted estimates of credit losses. Credit losses are measured as the difference between the cash flows due in accordance with the contract and the cash flows expected to be received, discounted at the effective interest rate of the financial asset. All financial assets subject to impairment based on the general approach are monitored to assess whether they have been subject to a significant increase in credit risk after initial recognition. There will be a significant increase in credit risk when: • payments are more than 30 days past due • a significant qualitative event has occurred ABC 46 Where it is assessed that a counterparty’s credit risk has increased significantly from its initial low risk designation, the related asset is moved from stage 1 to stage 2. An assessment is performed at each reporting date to determine whether financial assets subject to impairment are credit impaired. A financial asset is credit impaired when there is observable evidence that one or more events have occurred that has had a detrimental impact on the estimated future cash flows expected to flow from the asset such as: • significant financial difficulty of the borrower, issuer or customer • a breach of contract such as a default (where the counterparty is unlikely to pay its obligations) or being more than 90 days past due • restructuring of a loan or advance on terms that the group would not otherwise consider • it is probable that the borrower or customer will enter bankruptcy or other financial reorganisation • the disappearance of an active market for a security because of financial difficulties Where the counterparty is assessed to be credit impaired, the related asset is disclosed in stage 3. Summary of staging Instrument Criteria used for assessment of expected credit loss measurement 12-month expected Lifetime expected credit loss Purchased or originated credit loss credit impaired Stage 1 Stage 2 Stage 3 Low credit risk Not credit impaired or Credit impaired or default significant increase in credit risk Trade and other Not applicable (simplified Elected to measure loss Financial asset more than Not applicable receivables approach applied and allowances at an amount 90 days past due therefore use lifetime equal to the lifetime expected credit loss) expected credit losses Finance leases, loans Credit risk is assessed as Financial asset more than Financial asset more than Financial asset that is credit receivable (other than low (where the credit risk 30 days past due 90 days past due impaired at initial home loans) and financial rating assigned is recognition guarantees equivalent to the globally understood definition of investment grade) Loans receivable (home Financial asset is not past Financial asset more than Financial asset more than Not applicable loans) due 30 days past due 90 days past due Investments and cash and Credit risk is assessed as Significant increase in There is objective evidence Not applicable cash equivalents low (where the credit risk credit risk since initial that the counterparty is rating assigned is recognition but there is no unlikely to pay its equivalent to the globally objective evidence of loss obligations understood definition of (ie the counterparty is still investment grade) considered likely to pay its obligations) Derecognition Financial assets are derecognised when the right to receive cash flows from the assets has expired or substantially all the risks and rewards of ownership have transferred from the group. Realised gains or losses on derecognition are determined using the last-in-first-out method. Gains and losses, including those accumulated in other comprehensive income, are recognised in profit or loss. The gross carrying amount of a financial asset is written off when the group has no reasonable expectation of recovering a financial asset. Financial assets written off may still be subject to legal action or other enforcement activities undertaken by the group to recover outstanding amounts where appropriate. Any subsequent recovery of amounts previously written off is recognised in profit or loss. When a financial asset is subject to a modification that does not result in derecognition, an assessment is done to determine whether the modified terms of the financial asset are substantially different from the original terms, considering both quantitative and qualitative aspects as follows: • The 10% test for financial liabilities is applied by analogy for the quantitative assessment. A modification is substantial if the present value of the modified contractual cash flows that were discounted at the original effective interest rate differs by 10% or more from the present value of the original contractual cash flows. • The qualitative assessment evaluates whether the changes to the contractual terms are material in nature, such as changes to the interest rate, maturity date, currency or other material contractual provisions. The modification is considered substantial if such changes are determined to be material, even if the 10% test is not met. The financial asset is derecognised if the quantitative or qualitative assessment indicates that the modification is substantial. A new financial asset is recognised at fair value with any resulting difference recognised in profit or loss. The carrying amount of the financial asset is recalculated as the present value of the modified cash flows, discounted at the original effective interest rate if the modification is not substantial. Any adjustment is recognised as a modification gain or loss in profit or loss. 2.10.2 Financial liabilities (excluding derivatives) Classification Financial liability balances have been classified as amortised cost. Measurement Initial recognition Financial liabilities are recognised at the date it becomes a party to the contractual provisions of the instrument. Where financial liabilities are carried at amortised cost, transaction costs are included in the value of the financial liability. Fees paid on the establishment of loan facilities are recorded as a payment made in advance where it is probable that some or all of the facility will be drawn down. Refer to note 2.9. The fees paid are recognised as transaction costs upon drawdown and then amortised to profit or loss within finance costs from the date of first drawdown to final maturity of each facility. ABC 47 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.10 Financial instruments (continued) 2.10.2 Financial liabilities (excluding derivatives) (continued) Measurement (continued) After initial recognition Financial liabilities at amortised cost are measured using the effective interest method. Derecognition Financial liabilities are derecognised when the obligation expires, is discharged or cancelled or there is a substantial modification to the terms of the liability. 2.10.3 Derivatives held for risk management Classification and measurement Derivatives held for risk management are not managed on a held-to-collect and/or for sale business model and the default classification and measurement is therefore at fair value through profit or loss unless they meet the criteria for and have been designated as cash flow hedges. Economic hedges Certain derivative instruments do not qualify for cash flow hedge accounting but are used for economic hedging. Changes in the fair value of these derivative instruments (realised and unrealised gains or losses) are recognised in profit or loss within net fair value and foreign exchange gain/loss. Cash flow hedges The relationship between hedging instruments and hedged items as well as risk management objectives and the strategy for undertaking various hedging transactions are documented at the inception of a transaction. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. It is expected that the values of the hedging instrument and hedged item will move in opposite directions because of the hedged risks (foreign exchange and interest rate risks). The hedge ratio is based on a hedging instrument with the same notional amount in currency terms as the hedged item or portion thereof designated for hedge accounting. This results in a hedge ratio of 1:1 or 100%. Day-one gains and losses are deferred in the statements of financial position (in derivatives held for risk management) and amortised on a straight-line basis over the term of the hedging instrument to profit or loss. Unamortised day-one gains and losses are written off to profit or loss if the related financial instrument is derecognised (extinguished) before maturity date. Day-one gains and losses on hedging instruments are predominantly a function of the inclusion of credit, liquidity and other risks in the terms of the trading instrument. These risks are not included in the determination of a hypothetical derivative used to measure fair value movements in a hedged item and are therefore excluded from any hedge accounting relationships. The effective realised and unrealised portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income within the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within net fair value and foreign exchange gain/loss. Cumulative gains or losses existing in other comprehensive income where the hedged item is a non-financial asset are included in the initial carrying amount of the asset when the forecast transaction results in the recognition of a non-financial asset. Gains and losses recognised in the cash flow hedge reserve in other comprehensive income will affect profit or loss in the periods during which the relevant non-financial assets are expensed to profit or loss. Cumulative gains or losses existing in other comprehensive income where the hedged item is a financial liability are taken to profit or loss within finance cost or net fair value and foreign exchange gain/loss when the cash flows occur on the hedged financial liability. When a hedging instrument expires, is sold or a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in other comprehensive income until the forecast transaction occurs. If a forecast transaction is still expected to occur, the cumulative gains or losses in other comprehensive income are reclassified from equity to profit or loss in the same periods during which the hedged forecast cash flows affect profit or loss. If a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to profit or loss within net fair value and foreign exchange gain/loss. Sources of ineffectiveness include the following: • period mismatches between the hedging instrument and hedged item • the fair value of the hedging instrument at the hedge relationship designation date (if not zero) • the fair value or cash flow of the hedged item and hedging instrument are dependent on different variables 2.10.4 Embedded derivatives Embedded derivatives that are closely related to the host contract are not separated and are effectively accounted for as part of the hybrid instrument. Derivatives that are separated are accounted for on terms that result in a fair value of zero at the date of inception. Option-based derivatives are separated on the terms stated in the contracts and will not necessarily have a fair value equal to zero at the initial recognition of the embedded derivative resulting in day-one gains or losses. These day-one gains or losses are recognised as deferred income and amortised over the period of the agreement to profit or loss. The changes in fair value of embedded derivatives are recognised in profit or loss within net fair value and foreign exchange gain/loss. The impact of the fair value gains or losses is taken into account in the calculation of current and deferred tax. 2.10.5 Financial guarantees Financial guarantees are contracts that require the group to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with the terms of a debt instrument. Financial guarantees are initially measured at fair value and subsequently at the loss allowance calculated in accordance with IFRS 9 Financial Instruments. 2.11 Future fuel supplies Coal The capital costs incurred which are associated with the contractual agreements with coal mines for the right to future coal supplies is accounted for as future fuel. The output of the coal mine is controlled through the contractual agreement between Eskom and the mine. Eskom does not have control over the coal resources until the coal has been mined and delivered to the group. ABC 48 The right to future coal supplies from coal mines is measured at cost. Cost includes payments made to coal suppliers for mine establishment and related equipment in terms of cost-plus agreements. The cost also includes the initial estimate of environmental rehabilitation of the mine as well as changes in the estimated timing or amount of outflow of resources or changes in the discount rate. The cost is amortised to coal inventory over the lesser of the life of the agreement or the underlying assets. Nuclear Expenditure incurred to obtain, convert, enrich and fabricate fuel assemblies is stated at cost in future fuel supplies. The fuel assemblies are transferred to inventory when they are received. Costs include the transfer from equity of any gains or losses on qualifying cash flow hedges relating to purchases of raw materials, fabrication and enrichment. 2.12 Inventories Coal, liquid fuel, maintenance spares and consumables Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and includes expenditure incurred in acquiring inventories and other costs in bringing inventory to its present location and condition as well as the cost of ongoing programmes to rehabilitate the impact of cost-plus mines on the environment and other closure costs for active mines that are charged to profit or loss within primary energy as the coal is consumed. The Eskom Grid Code specifies the minimum coal inventory level to be on stockpile at the coal-fired power stations (either 10 or 20 days). All coal inventory up to the grid code level (except for Medupi and Matimba power stations) is classified as non-current as it is not anticipated that it will be used within 12 months from the reporting date. Coal inventory at Medupi and Matimba power stations is classified as non-current as it is not expected that the coal will be used within 12 months from the reporting date as it is foreseen that the planned production requirements of these stations will be met from the minimum contractual offtake of the underlying coal supply agreements. Nuclear fuel Nuclear fuel consists of enriched and fabricated fuel assemblies and fuel in reactors. Nuclear fuel is stated at the lower of cost and net realisable value. Cost is determined on the first-in-first-out basis and includes cost for the management of fuel assemblies that are recognised to profit or loss on a straight-line basis within primary energy over the estimated useful life of the fuel in the reactor (average 46 months). Nuclear fuel is classified as current as it is expected to be realised within the normal operating cycle. 2.13 Loan from shareholder The loan from the shareholder in terms of the debt relief arrangement arises from the Debt Relief Act, 7 of 2023, and is accordingly classified as a statutory liability. The group elected to measure the loan at historic cost in terms of the Conceptual Framework for Financial Reporting. The loan is subsequently measured at amortised cost. Finance costs are recognised in profit or loss within finance costs. The loan is derecognised when the Minister of Finance confirms that the attached conditions were met and approves that the amounts can be converted to equity. Refer to note 3.1.3. 2.14 Income tax Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income or equity, in which case it is recognised on that basis. 2.15 Deferred tax Deferred tax is recognised on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred tax is determined using tax rates (and laws) enacted or substantively enacted at the reporting date and that are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax is also recognised in respect of temporary differences arising on the assets and provisions created in respect of decommissioning and nuclear waste management and closure, pollution control and rehabilitation. Deferred tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss • temporary differences relating to investments in subsidiaries and associates to the extent that the group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Future taxable profits are determined based on business plans for legal entities in the group and the probable reversal of taxable temporary differences in future. The estimation of future taxable profits is an area of judgement. Deferred tax assets are reviewed at each reporting date and derecognised if it is no longer probable that the related tax benefits will be realised. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the group expects to recover or settle the carrying amount of its assets and liabilities at the reporting date. The derecognition of the deferred tax assets is reversed when the probability of future taxable profits improves. 2.16 Payments received in advance, contract liabilities and deferred income Customer connections Customer connections arise when customers make a contribution to the group to construct regular distribution and transmission assets or when the constructed assets are transferred to the group to connect customers to the electricity network. Contributions are made in advance in terms of a financing agreement or the completed assets are transferred to the group. Customer connections received in advance are initially recognised as payments received in advance. The related customer connections that arise when customers transfer distribution and transmission assets to the group to connect to the electricity network are accounted for when the customer hands over the completed assets to the group. ABC 49 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.16 Payments received in advance, contract liabilities and deferred income (continued) Customer connections (continued) Connections for electricity customers that were connected after 1 April 2018 (transition date to IFRS 15) When the connection provides the customer with a material right, the connection is allocated to deferred income (contract liabilities) when the customer is connected to the electricity network. The deferred income is recognised in profit or loss within revenue on a straight-line basis over the estimated customer relationship period as the connection provides the customer with a material right of renewal that extends the revenue recognition period beyond the initial contractual period. When the connection does not provide the electricity customer with a material right, the connection is recognised in full in profit or loss within revenue when the customer is connected to the electricity network. Connections for electricity customers that were connected after 30 June 2009 but before 1 April 2018 Connections were recognised in profit or loss when the customer was connected to the electricity network in terms of IFRIC 18 Transfers of Assets from Customers. Connections for electricity customers that were connected before 30 June 2009 Connections were allocated to deferred income when the customer was connected to the electricity network. The deferred income is recognised in profit or loss within revenue on a straight-line basis over the expected useful lives of the related assets. Refer to note 2.19 for revenue recognition of connections. Grants Government grants for electrification are initially recognised in payments received in advance and allocated to deferred income when the related asset has been connected to the electricity network. The deferred income is recognised in profit or loss within depreciation and amortisation expense on a straight-line basis over the expected useful lives of the related assets. 2.17 Employee benefit obligations Post-employment medical benefits All permanent employees qualify for post-employment medical benefits, except for new employees appointed on or after 1 June 2003 at a managerial level. The entitlement to post-employment medical benefits is conditional on the employee remaining in service up to retirement when the employee qualifies for the full benefit. Retirement includes any early retirement from age 55 up to normal retirement at age 65. The post-employment medical benefits obligation is accounted for as a defined benefit plan in line with IAS 19. The post-employment medical benefits plan is unfunded. The cost to the employer in the form of employer contributions is actuarially determined. Provision is made for the estimated cost over the period until the date of early retirement at age 55 when further service by the employee will lead to no material amount of further benefits to the employee. Actuarial gains or losses are recognised in other comprehensive income within remeasurement of benefits. Interest and other expenses related to these benefits are recognised in profit or loss. Pension benefits All permanent employees of the group are members of the Eskom Pension and Provident Fund (EPPF) in terms of its rules and conditions. The EPPF is registered as a defined benefit fund in terms of the requirements of the Pension Funds Act, 24 of 1956. The assets and pension benefits are administered by the EPPF which is a separate legal entity to the group. The board of trustees of the EPPF consists of an equal number of employer (includes appointing a non-executive chair and an expert) and member (includes managerial, labour and pensioners) representatives. The board of trustees is required by law to act in the best interest of the plan participants in terms of the rules of the fund and the provisions of the Pension Funds Act , 24 of 1956, and are responsible for setting policies including those governing investments and ensuring that there are sufficient assets to meet the pla obligations as they become due. The board of trustees generally targets to have a portfolio mix of a combined 70% in equity and property and 30% in debt instruments. The board of trustees aims to keep fund assets at a level such that no plan deficits (based on actuarial valuations performed) will arise. Eskom, NTCSA, ERI and the EPPF itself are the employers in the EPPF. The fund is measured as a whole and there is no policy in place for proportionate allocation of net assets to individual entities of the group. The fund is accounted for in terms of IAS 19 as a defined benefit plan although the terms of the fund do not automatically require the employer to make good any deficit should it arise. The contributions to the EPPF comprise 20.8% of pensionable emoluments of which 13.5% is contributed by the employer and 7.3% by members. Contributions are made by each employer in the fund. Pension benefits are provided by the EPPF to all pensioners of the fund in terms of the rules of the fund. The annual pension benefit on retirement is based on a defined formula of 1.085/600 of the final average emoluments over the last year of service multiplied by the pensionable service period in months. The formula does not limit the benefits payable to the assets and contributions made to the fund. However, the rules of the fund state that any deficit on the valuation of the fund will be funded by increases in future contributions (if consented to by the employer) or reductions in member benefits (as agreed by the members). The obligation on Eskom as the employer to contribute towards the deficit is an area of judgement. As the benefit formula does not limit the payments to the assets in existence in the fund at the payment date, management concluded that the actuarial and investment risk fall on Eskom when considering the requirements of IAS 19 and therefore classified the fund as a defined benefit fund. If there is a substantial surplus on the valuation of the fund, future contributions may be decreased or pensioner benefits may be improved as determined and appropriated by the trustees of the fund. The surplus is not controlled by Eskom but by the trustees of the fund in terms of the Pension Fund Act, 24 of 1956, and rules of the EPPF. An asset ceiling is therefore applied in the case of a surplus that limits the net benefit asset to zero. The pension benefits plan is funded. The cost to the employer, in the form of employer contributions, is actuarially determined. Return on plan assets in excess of interest, adjustments to the asset ceiling and actuarial gains or losses on the obligation are recognised in other comprehensive income within remeasurement of benefits. The expense or income recognised in profit or loss includes the current service cost, interest income on plan assets and interest expense on the defined benefit obligation and the irrecoverable surplus (effect of asset ceiling). ABC 50 Occasional and service leave The liability for occasional and service leave is of a long-term nature in terms of IAS 19 as it is not expected to be settled wholly within 12 months after the reporting period but there is no unconditional right to defer settlement for at least 12 months after the reporting period. The full provision is therefore presented as a current liability in the statements of financial position. An actuarial valuation of the occasional and service leave liability is performed at the reporting date. All actuarial gains or losses and past service costs are recognised in profit or loss within employee benefit expense. The present value of the benefit is determined by using government bonds which have maturities similar to the liability. Bonus Short-term bonus Annual, performance and production bonuses are short-term employee benefits which are expensed as the related services are provided. A liability is raised for bonuses as follows: • annual bonus: on a proportionate basis as services are rendered • performance bonus: on the estimated amount payable in terms of the incentive scheme which is based on the performance of the business and employees in the applicable year • production bonus: on the estimated amount payable in terms of the incentive scheme which is based on improved performance in the production environment Long-term bonus A liability and corresponding expense are raised annually over the vesting period based on the estimated amount payable in terms of the rules of the long-term incentive scheme. Refer to note 49. 2.18 Provisions Provisions are recognised when the group has a present legal or constructive obligation as a result of a past event, when it is probable that an outflow of resources will be required to settle the obligation and when the amount can be reliably estimated. Provisions are not recognised for future operating losses. The valuation of long-term provisions requires a degree of judgement regarding the future cash flows and the timing thereof. Provisions are determined by discounting the expected future cash flows using pre-tax discount rates that reflect current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The initial cost of a provision is capitalised against the cost of the related asset if it meets the requirements for capitalisation. Subsequent changes in the liability for capitalised provisions are added to, or deducted from, the cost of the related asset. Any amount exceeding the cost of the related asset is allocated to profit or loss. The increase in the provision due to the passage of time is recognised as an expense in profit or loss under finance costs. The main categories of provisions include the following: Power station-related environmental restoration – nuclear (plant and spent fuel) and other generating plant The provision includes the estimated decommissioning cost of nuclear and other generating plant. The estimated cost of decommissioning at the end of the productive life the plant is based on engineering and technical estimates and reports from independent experts. The initial cost of the provision is capitalised against property, plant and equipment. A provision is also raised for the management of used fuel assemblies and high radioactive waste (referred to as spent nuclear fuel), which is recognised and measured based on reports from independent experts. The costing and methodologies are revised on a regular basis to ensure alignment with the relevant requirements, including the National Nuclear Regulator of South Africa and the National Radioactive Waste Management Policy. The cost for the fuel assemblies is included in the cost of inventory while the fuel is in the reactor. The cost relating to radioactive waste is charged to profit or loss within primary energy. Mine-related closure, pollution control and rehabilitation The provision includes the estimated cost of physical, biophysical and social closure and environmental rehabilitation of the mines where a legal or constructive obligation exists. The initial cost of the provision is capitalised against future fuel. The cost of ongoing closure and rehabilitation programmes for active mines is charged to inventory and subsequently to profit or loss within primary energy as the coal is consumed, while the cost relating to defunct mines is charged directly to profit or loss. Compensation events Compensation events and claims are a normal part of construction agreements and are triggered by changes in the scope of work or time needed to complete the work. A dispute resolution process, as outlined in the contractual agreements, is followed as and when a compensation event or claim arises and is dealt with through a structured process involving notification, consultation, assessment and agreement or adjudication. All open compensation events and claims are assessed at the reporting date by management’s experts and legal advisors (where deemed necessary) based on the latest available information to determine the probability of an outflow of resources and the best estimate of the expenditure that would be required to settle the present obligation. There is significant judgement applied by management and the board, based on past experience regarding the finalisation and outcome of compensation events, in determining the appropriate provision for these matters. The related costs are charged to profit or loss within other expenses or assets under construction if it meets the requirements for capitalisation. Other Other provisions include provisions made for contractual obligations relating to onerous contracts, litigation matters and guarantees. These provisions are recognised based on contractual obligations and measured based on the best estimate of the expenditure that would be required to settle the present obligation at the end of the reporting period and are charged to profit or loss within other expenses. The amount of the provisions is based on management’s assessment of the most likely amounts due based on the current information available. The group expects to settle the majority of these provisions within 12 months. The finalisation of an obligation depends on factors outside the control of the group, for example, arbitration and dispute resolution processes, which could impact the timing. It is not expected that any additional liability in excess of the amounts provided would have a material adverse effect on the group’s financial position, liquidity or cash flow. ABC 51 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.19 Revenue from contracts with customers The main revenue activity of the group is the sale of electricity to users, which is recognised when electricity is consumed, with supporting inter- segment transactions between the generation, transmission (NTCSA) and distribution segments. The operations of the other subsidiaries in the group (such as employee home loan financing, insurance, maintenance, and construction services) support the group activities but are not part of the core electricity revenue chain and are therefore excluded from the group’s principal revenue stream. The sale and purchase of electricity between the generation, transmission and distribution segments are based on contractual agreements which enable the recognition of inter-segment energy related revenue and recoveries (achieved through transfer pricing) for the flow of electricity from generator to consumer. NTCSA began operating as a standalone entity on 1 July 2024 after the transfer of transmission-related assets and liabilities from Eskom to NTCSA as part of a common control transaction on 31 March 2024. Inter-segment revenues and recoveries are eliminated in the consolidated financial statements and reflected in the inter-segment revenue/recoveries column of the segment report. Refer to note 7 for further information on services and related charges between segments for the sale and purchase of electricity. Revenue is recognised when a customer obtains control of the goods or services supplied. The amount of revenue recognised is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Customers that fail the collectability criterion are accounted for on a cash basis and revenue is only recognised when cash is received. The transaction price is then recognised in profit or loss within revenue and the related payment for VAT is allocated against the trade and other receivables balance. Refer to note 4.6. An invoice is still raised for sales to customers accounted for on a cash basis. The group has a statutory obligation to charge VAT for local customers, payable to SARS, when an invoice is created which gives rise to a receivable that is accounted for as a statutory receivable within other receivables. A portion of the VAT on revenue recognised on a cash basis (for municipalities recorded on a cash basis) are not expected to be realised within 12 months after the reporting period because of the low payment levels of the municipalities which are accounted for on the cash basis and are therefore classified as non-current. An impairment is raised based on the discounted cash flows at a market related interest rate. The expected recovery period is based on current information and past experience limited to a maximum recovery period of five years to provide for a recovery from SARS through a write-off. The group’s principal revenue-generating activities are as follows: Revenue activity Nature and timing of satisfaction of performance Revenue recognition obligation, including significant payment terms Electricity sales Performance obligation is settled when electricity is Revenue is recognised over time as electricity is consumed by the customer supplied to the customer. Most customers pay for (ie when control is transferred). Conventional customers are billed on a electricity after consumption and have terms monthly basis after electricity is consumed whereas prepaid customers pay ranging between 15 and 45 days. Some customers for electricity upfront when electricity tokens are purchased resulting in a prepay for electricity. contract liability to deliver electricity in the future. Prepaid revenue is recognised and the contract liability derecognised for electricity consumed on tokens loaded on the prepaid meter. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Connections Connections arise when customers make a Connections that were completed before 30 June 2009 were allocated to contribution to the group to construct regular deferred income when the customer was connected to the electricity distribution and transmission assets or when the network. The deferred income is recognised in profit or loss within revenue constructed assets are transferred to the group to on a straight-line basis over the expected useful life of the related assets. connect customers to the electricity network. Connections that were completed after 30 June 2009 were recognised as Connections arise from contracts with customers revenue when the customer was connected to the electricity network in who will also become electricity purchasing terms of IFRIC 18. customers once they are connected and those who Connections that were completed from 1 April 2018 are recognised as follows: will not purchase electricity (eg proper ty developers). • connections relating to electricity purchasing customers where there is a material right are allocated to deferred income when the customer is connected to the electricity network. The deferred income is recognised in profit or loss within revenue on a straight-line basis over the estimated customer relationship period of 25 years. Refer to note 26 for the contract liabilities of connections recognised on a straight-line basis • connections relating to electricity purchasing customers where there is not a material right are recognised as revenue over the initial contract term • connections relating to non-electricity purchasing customers are recognised as revenue at a point in time when the customer is connected to the electricity network Other Ad hoc requests for electricity-related services that Revenue is recognised at a point in time when the service is completed. are distinct from the sale of electricity or the connection of customers to the grid. The assessment to defer revenue for connection charges from electricity customers requires judgement because of divergent international treatments based on contract and operational differences. Changes to the recognition of customer connections are not expected based on the current information available. The assessment of whether a connection charge is a material right or not in terms of IFRS 15 requires judgement of what constitutes a material right from the perspective of the customer and results in different accounting treatments as discussed above. ABC 52 2.20 Finance income Finance income comprises interest receivable on loans, trade receivables, finance lease receivables and income from financial market investments. Finance income is calculated by applying the effective interest rate method to the gross carrying amount of non-credit impaired financial assets (ie at the amortised cost of the financial asset before adjusting for any expected credit loss allowance). Finance income on credit impaired financial assets is calculated by applying the effective interest rate to the amortised cost of the credit impaired financial assets (ie the gross carrying amount less the allowance for expected credit losses). Interest income is recognised in profit or loss. 2.21 Finance cost Finance cost comprises interest and fees payable on debt securities and borrowings and lease liabilities, interest resulting from derivatives held for risk management and interest from the unwinding of discount on liabilities. Borrowing costs which are not capitalised are recognised in profit or loss. Refer to note 2.7. 2.22 Assets and liabilities held-for-sale Assets and liabilities (or disposal groups) which meet the definition of held-for-sale under IFRS 5 Non-current Assets Held-for-Sale and Discontinued Operations are stated at the lower of their carrying amount or fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction. Assets not in the measurement scope of IFRS 5 are measured at the applicable IFRS Accounting Standards before classification as held-for-sale. 2.23 Net debt Gross debt is the aggregate of debt securities and borrowings, loan from shareholder and lease liabilities. Net debt is calculated by adjusting gross debt for related payments made in advance, derivatives held for risk management and cash and cash equivalents. 3. Capital management, going concern and impairment 3.1 Capital management The objective of capital management is to ensure that the group is sustainable over the long term. The government, as the sole shareholder, and the board have the responsibility to ensure that the group is adequately capitalised and that the business is attractive to investors and lenders. Group funding consists of external debt and equity investments by the shareholder (including those under the Debt Relief Act and Debt Relief Amendment Act), funds generated from operations and funds borrowed on local and foreign debt markets (limited to borrowings approved by the Minister of Finance during the debt relief period and drawdowns on existing facilities). The following capital reserves are managed by the group: Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Share capital 24 317 550 241 550 317 550 241 550 Other capital 8 000 44 000 8 000 44 000 Accumulated loss (38 930) (51 564) (89 802) (74 057) Net debt 44 358 652 401 060 379 076 402 675 645 272 635 046 614 824 614 168 Facilities available – debt securities and borrowings 1 14 116 22 495 14 116 22 495 3.1.1 Share capital Share capital consist of R317 550 million of issued shares. 3.1.2 Accumulated loss Revenue The group analyses the Integrated Resource Plan (which forecasts the growth in long-term electricity demand) and evaluates the alternative options to meet and manage forecast demand. This information impacts the planning process and informs the revenue applications made to NERSA for tariff increases that will allow the group to be financially sustainable. Operating cost The group continues to pursue cost-saving opportunities to assist in ensuring financial sustainability. The following non-generally accepted accounting principles profit or loss measures (unaudited) are monitored by management: Group Company 2025 2024 2025 2024 % % % % EBITDA margin 29.05 14.67 19.35 14.45 Net profit/(loss) margin 4.71 (18.60) (3.85) (19.30) 3.1.3 Net debt Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Funding used 121 944 133 682 112 441 133 407 Debt repayment and net finance costs 77 571 88 739 76 774 89 084 Investment funding requirements 44 373 44 943 35 667 44 323 Funding raised 121 944 133 682 112 441 133 407 Cash from operations 85 945 40 396 59 739 41 109 Financing activities 76 264 109 336 92 557 109 418 Unused cash (40 265) (16 050) (39 855) (17 120) 1. Facilities in foreign currency (refer to note 5.3.2) are converted to rand at mid-spot rate (refer to note 5.2.1) at reporting date. ABC 53 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 3. Capital management, going concern and impairment (continued) 3.1 Capital management (continued) 3.1.3 Net debt (continued) The following ratios (unaudited) play an important role in the credit ratings given to the group, which in turn influences the cost of funding. The credit rating of the group is affected by its own financial position as well as the credit rating of the sovereign: Group Company Unit 2025 2024 2025 2024 Net debt: equity Ratio 1.29 1.80 1.67 2.01 Net debt: EBITDA Ratio 3.62 9.24 6.13 9.42 Net debt service cover Ratio 1.11 0.46 0.78 0.46 Free funds from operations: net debt % 29.58 13.46 19.10 13.17 Eskom’s credit ratings at 31 March were as follows: Rating Outlook 2025 2024 2025 2024 Standard & Poor’s Foreign currency B CCC+ Credit watch positive Credit watch positive Local currency B CCC+ Credit watch positive Credit watch positive Moody’s Foreign currency B2 Caa1 Positive Positive Local currency Baa3 B1 Positive Positive Fitch ratings Local currency B B Stable Stable Net debt is sourced globally (limited to borrowings approved by the Minister of Finance during the debt relief period) to ensure the lowest cost of funding. Net debt is managed via the continuous monitoring of current and potential debt funding arrangements to achieve the most favourable terms possible. These terms and costs are heavily dependent on the group’s credit rating. Eskom is focusing on alleviating the rating agencies’ concerns regarding the high leveraged financial profile, inadequate electricity price path and funding requirements of the group. Funds received and not yet spent are invested to provide the maximum possible return while ensuring minimal capital risk and matching the maturity term requirements of the spending of the amount. Refer to note 44 for a reconciliation of the movements and analysis of the composition of net debt. Debt relief arrangement The Eskom Debt Relief Act, 7 of 2023, provides debt relief of R254 billion to Eskom over three years, subject to conditions to allow for the conversion of the debt relief to equity, consisting of liquidity support of R184 billion together with the takeover of R70 billion in Eskom debt (principal and interest) in 2026 to support Eskom’s debt and interest payments as they fall due. The Eskom Debt Relief Amendment Act, 5 of 2025, replaced the initial takeover of R70 billion in Eskom debt in 2026 with loans convertible to equity (subject to conditions being met) of R40 billion and R10 billion in 2026 and 2029 respectively. The conditions were confirmed by the Minister of Finance in terms of section 2(2)b of the Act. The conditions that are applicable from 1 August 2023 to 31 March 2026 (which can be amended by the Minister from time to time) are as follows: • The debt relief may only be used to settle debt and interest payments. • Capital expenditure may only be incurred for transmission and distribution as well as generation relating to minimum emission standards, flue-gas desulphurisation, outages and maintenance of existing plant and a greenfield generation project with the written approval from the Minister of Finance. • All net cash proceeds from the sale of non-core assets, including EFC and any property sales may only be used to settle debt and interest payments. • Eskom may only borrow new facilities with the written approval of the Minister of Finance. • The Eskom guarantee framework agreement for the R350 billion facility (which expired on 31 March 2023) must, subject to the terms of that agreement, be reduced as the relevant redemptions fall due. • Positive equity balances in Eskom’s derivative contracts may not be used to structure new debt or loan agreements or be used as margin financing for another derivative contract or derivative overlays, without the written approval of the Minister of Finance. • Eskom must continue to prioritise and expedite the implementation of the legal separation process, including for example, obtaining the required lender consent. • Eskom may not implement remuneration adjustments that negatively affect its overall financial position and sustainability. • Any transaction undertaken in terms of section 54 of the PFMA must be subject to joint approval by the Eskom shareholder representative and the Minister of Finance. The loan is settled in Eskom ordinary shares upon confirmation of compliance with the conditions and obtaining written approval from the Minister of Finance in terms of the Debt Relief Act, 7 of 2023, for conversion to equity. Any unconverted loan amounts that fail to qualify for the conversion of debt to equity due to non-compliance with the conditions will become due and payable after the debt relief period (from 1 April 2026) and a separate loan agreement will be entered into with specific terms and conditions. The Eskom Debt Relief Amendment Act, 5 of 2024, provides for the payment of interest on amounts advanced as a loan at a rate determined by the Minister of Finance from the first disbursement received in 2025 and power to the Minister of Finance to reduce the support for the requirements of Eskom (limited to five percent of the total amount allocated for the applicable financial year) in the event of non-compliance with the conditions. The debt relief support was permanently reduced by R2 billion in both 2024 and 2025 to R76 billion and R64 billion respectively due to the delay in the sale of EFC which continues to be prioritised. Refer to note 23. ABC 54 3.2 Going concern The board assessed the ability of the group to continue as a going concern in the foreseeable future. The board: • Reviewed the performance of the group for the year ended 31 March 2025 including the net profit after tax of R16 047 million and the net current assets of R4 603 million. • Considered the impact of the cash flow forecast for the 24 months ending 31 March 2027 and the projected net profit before tax for 2026 estimated at R23 000 million (unaudited – information has not been reviewed or reported on by the external auditors). • Noted the improvement in the financial indicators of the group compared to 31 March 2024, in particular, the improvement in the EBITDA and EBITDA margin. • Noted the increase in the cash and cash equivalents balance to R63 761 million from R23 585 million at 31 March 2024, mainly due to the debt relief support received as well as improved cash from operations during the year. • Noted that the liquidity in the longer term after the debt relief period remains at risk because of financial sustainability challenges arising from an inadequate tariff path and structure, high debt service costs, escalating municipal arrear debt, operational inefficiencies, the impact of crime, fraud and corruption (including loss of revenue because of illegal electricity connections and illicit prepaid electricity tokens), continued focus on addressing plant performance and funding requirement to expand the transmission infrastructure for new generation sources. • Noted the remaining portion of the debt relief support from government of R40 billion in 2026, including the conditions that the group needs to comply with to allow for the conversion of debt relief to equity, to address Eskom’s debt and interest payments as they fall due thereby allowing Eskom to better manage its liquidity position. • Noted that the total initial debt relief arrangement from government of R254 billion introduced in the Eskom Debt Relief Act, 7 of 2023, reduced to R230 billion as discussed below. • Noted and considered the implications of the Eskom Debt Relief Amendment Act, 5 of 2025, published on 12 March 2025 that proposes to replace the initial takeover amount of R70 billion of Eskom debt (principal and future interest) with R50 billion (R40 billion in 2026 and R10 billion in 2029) debt relief support from government for conversion to equity upon complying with the conditions. • Noted the permanent reduction of R2 billion in the debt relief support in the current year (2024: R2 billion) because of the delay in the disposal of EFC. The sale of the EFC disposal group continued to be prioritised and it is expected to be concluded before 31 March 2026. Refer to note 23. • Noted that R250 million of interest was paid on the debt relief support received in 2025. The Eskom Debt Relief Amendment Act, 5 of 2024, provided for the monthly payment of interest on amounts advanced as a loan at the 91-day Treasury Bill rate and gave the Minister power to reduce the support to Eskom in the event of non-compliance with the conditions. Any loan amount after the debt relief period that fails to qualify for the conversion of debt to equity because of non-compliance with the conditions will become due and payable from 1 April 2026. • Noted that no new borrowings (except for drawdowns from existing facilities) were allowed from 1 April 2023 until the end of the debt relief period unless approved by the Minister of Finance. All other operational and relevant capital expenditure is financed through operational cash flows and drawdowns from existing project-related loan agreements. • Noted the remaining R329 billion of the government guarantees issued on borrowings before 31 March 2023 in terms of the government guarantee facility (initially R350 billion) will remain in place until the settlement of the guaranteed debt. • Considered the impact of the continuous increase in overdue electricity receivables, mainly due to growing municipal arrear debt (including the impact of non-recoverability of long outstanding electricity receivables) and the municipal debt relief arrangement that is yielding minimal results with most of the municipalities failing to comply with the conditions. This represents a material risk and places a significant financial strain on the going-concern assessment. An amount of R0.5 billion relating to municipalities that were compliant with the debt relief conditions was written off during the year and an additional R3.5 billion will be written off in 2026 in line with instruction received from National Treasury. The municipal arrear debt is a key matter that should be resolved before the legal separation of the distribution business as it impacts the liquidity and solvency as well as the financial sustainability of the business. • Considered the impact of improved generating plant performance as well as the ongoing positive and incremental impact of the Generation Recovery Plan, even though certain challenges remain. A worsening of the aged generating plant performance could negatively impact cash flow due to lost revenue and an increase in costs, including the level of spend required on OCGTs. The generation capacity of the group continues to be managed as a critical focus area to ensure appropriate steps are being taken to manage performance. • Considered the impact of the current economic climate, including that some rating agencies expressed a positive outlook on the group. • Acknowledged that an acceptable price increase, uncertainty of the impact of separate licensed electricity price (tariff ) determinations, application of the pricing methodology, continued improved plant performance, addressing payment by municipalities and the uncertainty and timing of a fully operational transmission system operator are critical factors in the going-concern assessment. • Noted the increase in non-technical energy losses because of illegal connections and the selling of illegal tokens which increase the current and future costs incurred by Eskom to produce energy with no corresponding revenue received. The creation of illegal tokens reduced during the year because of the strengthening of the internal control environment and interventions put in place. • Noted the impact of extending the useful life of Koeberg power station unit 1 with an additional 20 years which decreased the nuclear decommissioning provision because of later expected cash outflows. The licence extension decision by the National Nuclear Regulator on unit 2 is expected to be announced prior to the licence expiry date of 9 November 2025. • Considered the impact on future cash flows of ongoing funds set aside for the funding of future nuclear decommissioning activities as directed by the National Nuclear Regulator (cumulative R2.4 billion in treasury investments) whilst discussions regarding a permanent solution are underway. • Noted that R16.4 billion of the cash and cash equivalents balance was earmarked for the funding of future decommissioning activities and clean energy projects consisting of an additional R4.3 billion set aside to fund future nuclear decommissioning activities as well as R3.0 billion for long-term coal decommissioning activities and R9.1 billion for clean energy projects. • Noted that R9.2 billion was received from SARS in 2025 after the resolution of the dispute between Eskom and SARS relating to previously disallowed fuel levy rebates. • Recognised the progress made with the legal separation of Eskom with NTCSA commencing trade on 1 July 2024. The corporatisation and operationalisation of the NEDCSA is deferred due to external dependencies and inter-ministerial alignment, the delayed operationalisation of NTCSA and escalating municipal arrear debt. The legal separation of generation is reliant on the establishment and operationalisation of a new holding company that is dependent on the promulgation of new legislation and government policy. • Noted that mechanisms of support to NTCSA include, amongst others, approval of a short-term credit facility with Eskom Treasury as well as immediate settlement of intercompany energy purchases and sales. • Recognised that the group continues to face various challenges that resulted from mismanagement and corruption which could influence on stakeholder sentiment. Management is focusing on addressing irregularities, improving processes and strengthening controls as well as enhancing a culture of work ethics and adherence. ABC 55 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 3. Capital management, going concern and impairment (continued) 3.2 Going concern (continued) • Noted the decision received from NERSA for the settlement of R40.2 billion relating to past RCA cases (2015 to 2021) on 5 May 2025 and endorsed through a court order on 9 May 2025. NERSA approved a settlement of R54 billion on 8 August 2025 relating to Eskom’s court review application for the MYPD 6 revenue decision (2026 to 2028) which was accepted by Eskom on 11 August 2025 and to be endorsed by a court order. The MYPD 6 settlement resulted in additional revenue recovery of R12 billion for 2027 and R23 billion for 2028. The remaining recovery will be determined by NERSA following their governance processes. Refer to note 48. • Considered the possible impact if key risks materialise and acknowledged that improved plant performance specifically the EAF and EUF, the management of operating (particularly generating expenditure) and capital costs, as well as addressing the escalating overdue electricity receivables are critical factors in the going-concern assessment. The challenges that the group is facing are being addressed by the following mitigation strategies and actions: • Continuous engagement is taking place with the shareholder and National Treasury to ensure that the challenges that impact the going-concern status of the group are addressed satisfactorily within a reasonable timeframe. Government believes that it is critical that a credible, comprehensive and long-term strategy (which incorporates addressing municipal receivables, providing greater clarity and transparency in tariff pricing and addressing operational efficiencies) is developed to fully optimise the group and company’s financial position. The Eskom debt relief arrangement is assisting in setting the group on a path to long-term financial stability. Compliance by the municipalities with the requirements of the municipal debt relief programme as set out by National Treasury remains a key focus area as the programme did not yield the expected results. • Eskom is working with National Treasury and the shareholder representative regarding Eskom’s ongoing compliance with the conditions of the debt relief arrangement to enable the conversion of the loan to equity. Total debt relief of R64 billion was received in 2025 of which R8 billion was approved for conversion to equity on 21 October 2024 and the remaining R56 billion on 11 June 2025. • There is continued focus on implementing various strategies to recover overdue electricity receivables. The successful outcome of these strategies remains uncertain. Eskom continually advised National Treasury of the municipalities not compliant with the municipal debt relief arrangement conditions. National Treasury is engaging with these municipalities to highlight the risk of terminating their participation in the debt relief programme. • Eskom continues to work with the Minister of Electricity and Energy leveraging the National Energy Crisis Committee structures to ensure that the Electricity Action Plan is implemented expeditiously in collaboration with all key stakeholders to resolve the electricity crisis. • The Electricity Regulation Amendment Act, 38 of 2024, that commenced on 1 January 2025, provides for NERSA to consider the application and issue of licences, new generation capacity and electricity infrastructure and the establishment of the transmission system operator in the future (fulfilled by NTCSA in the interim) to cater for an open market platform that will allow for competitive electricity trading with entity specific revenue determinations by NERSA in line with the approved licences. The transition period (uncertainty relating to detail and timing) is a time-consuming process involving various stakeholder consultations and approval by NERSA. The process for the development, approval and implementation of the market operating licence, market code, rules and trading platform (system) as well as the qualifying criteria for participants are underway. • The cost structures and capital programme of the group are continuously reviewed to extract cost savings as well as improve liquidity and ultimately financial sustainability. • The group is aware of outstanding RCA decisions and the impact of large capital projects on its statement of financial position and will only engage in such projects in compliance with the conditions attached to the Eskom Debt Relief Act, 7 of 2023, and with full disclosure and approval by the Minister of Finance and the shareholder. The board considered that there are uncertainties and dependencies that exist both from the perspective of timing of interventions as well as whether the plans will materialise as anticipated. The events, conditions and assumptions described above inherently include material uncertainties that may cast significant doubt on the going concern of the group and company. The board has a reasonable expectation that the risks will be satisfactorily addressed with the mitigation strategies in place. The board continues to manage these strategies as a priority as it is important that they materialise as envisaged. The board assessed the current cash flow projections considering that future capital costs during the debt relief period will be funded from cash from operations. The board concluded after carefully considering the progress of the initiatives included in note 3.2 and the continued financial support from the government through the debt relief arrangement that there is a reasonable expectation that the group and company have access to adequate resources and facilities to be able to continue its operations and fund the capital programme for the foreseeable future as a going concern. The consolidated and separate financial statements have therefore been prepared on a going-concern basis. 3.3 Impairment assessment of the Eskom CGU The Eskom CGU (refer to note 2.6) was assessed for impairment because of ongoing liquidity, financial and operational performance challenges. The assessment includes property, plant and equipment and assets with an indefinite useful life of intangible assets (rights). The group uses two models as part of its impairment assessment to determine the recoverable amount of the Eskom CGU. Fair value less cost of disposal The fair value less cost of disposal (no estimate for the cost of disposal was provided, as this is deemed to not be material) is determined using a cost- based methodology, referred to as the DRC method that is a calculated proxy to assess for impairment (referred to as the Eskom regulatory model). The DRC approximates the current cost of replacing an asset with its modern equivalent asset less deductions for physical deterioration and all relevant forms of obsolescence and optimisation. This approach is normally adopted for the valuation of specialised assets or installations where there is little or no comparable market evidence to estimate value. A revenue shortfall that approximates the discount to market participants was deducted to determine the fair value as the electricity tariff is not cost reflective and therefore results in an insufficient return on assets. Value in use The value in use calculation is based on the estimated future cash flows discounted to their present value based on the future revenue and cost to operate and maintain the assets over their useful lives. Estimates in the value in use calculation include long-term growth rates, electricity sales volumes, price path, available generation capacity from existing IPPs and specific generating capacity and discount rates. Estimates are based on past experience and expectations of future changes in the market, including the prevailing economic climate. ABC 56 Key assumptions The cash flow projections used in the two models were based on the Eskom Corporate Plan for 2026 to 2030, adjusted for known differences and the exclusion of future new capacity and expansion of assets. The projections after the first five years were extrapolated based on the estimated long-term average growth rates, inflation and available existing capacity. The extrapolation beyond the first five years was deemed appropriate as generating plants have long useful lives. A declining sales trajectory limited to available capacity was assumed. The available capacity depends on generating capacity (still under construction) becoming available and decommissioning of old power stations. It was assumed that there will be no new electricity production sources, both from Eskom and IPPs. Negotiated pricing agreements for revenue was included until 2040 with a significant decrease from 2032. The use of OCGTs was assumed at an average load factor of 6% in 2026, 3% for 2027 to 2029, increasing to 5.5% in 2030 for Eskom plant and then reducing over time to 3% for IPP owned plant. The EAF of the power stations was aligned to the performance at year end, with a gradual improvement over time. The price path is based on the NERSA MYPD 6 approved price increase of 12.74% for 2026, 5.36% for 2027, 6.19% for 2028, adjusted for the recovery of known differences from 2027 onwards, including the recovery of R54 billion relating to the MYPD 6 revenue determination and R40.2 billion relating to past RCA cases for 2015 to 2021, as well as an assumed long-term estimate for all future price increases not yet applied for. A conservative view was taken on overdue municipality debt by assuming that it will continue to increase at the assumed tariff increase rate with no further decline in payment levels. The possible positive impact of the municipal debt relief arrangement was not considered as the majority of the accepted municipalities have not been complying with the conditions. Eskom will only be impacted by carbon tax in 2031 with a substantial increase in cost from 2032. Management concluded that the key assumptions (which includes price path and EAF) are reasonable. The price increases used for the Eskom CGU were: Year ended 31 March 2026 2027 2028 2029 2030 2031 % % % % % % 2025 Price increase 13 9 9 9 9 8 Year ended 31 March 2025 2026 2027 2028 2029 2030 % % % % % % 2024 Price increase 13 15 14 18 11 4 An average long-term negative sales growth rate of 5% (2024: 5%) was used whilst there was sufficient production capacity to support sales. Once production capacity was insufficient to support sales, sales was restricted to production capacity. A pre-tax nominal discount rate of 15.6% (2024: 16.3%) was used as derived from the NERSA determination. Sensitivity analysis Price sensitivity A conservative price path has been assumed to keep the price below 10%. The price already approved by NERSA was used for 2026 to 2028 with an uplift for 2029 onwards to allow for the recovery of known differences. A reduction of 1% in the price assumption for 2027 results in the recoverable amount exceeding the carrying amount by 4% (2024: 5%). Discount rate sensitivity An increase of approximately 1% (2024: 2%) in the discount rate will result in the recoverable amount equal to the carrying value. Arrear debt and non-recovery of arrear debt sensitivity A 2% increase in the arrear debt ratio results in the carrying value exceeding the recoverable amount by 10% (2024: 3%) on an assumed ratio of actual arrear debt to electricity revenue (2024 assumed a ratio of average arrear debt to electricity revenue). An increase of approximately 2% in the non-recovery of the arrear debt ratio results in the carrying amount exceeding the recoverable amount by 5% (2024: 2%) on an assumed increase of 2% (2024: 4%) in the non-recovery of arrear debt from 2035 (2024: 2030). Other sensitivities A 1% cumulative increase in the cost of coal over 2026 to 2050 period results in the recoverable amount exceeding the carrying amount by approximately 8% (2024: 0%) based on an assumed 5% (2024: 0%) cost saving from 2030. EAF was assumed to be 62% in 2026 with a gradual increase of 2% per annum until 2030, stabilising at 70% from 2030 to 2037 and increasing again thereafter. A 1% cumulative reduction in available total production from coal plants over the 2026 to 2050 periods results in the recoverable amount exceeding the carrying amount by approximately 6% (2024: 5%). Conclusion No impairment loss was recognised on the Eskom CGU as the recoverable amount of the Eskom CGU (determined based on the higher of its fair value less costs of disposal and value in use) was higher than the carrying value. The estimated value in use exceeds the carrying amount with 9% (2024: 9%). ABC 57 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 4. Critical accounting estimates and assumptions The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed in this note. The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to the previous period unless specifically indicated. Sensitivity analyses are calculated based on a change in a single key assumption keeping all other assumptions constant. It is unlikely that changes in assumptions would occur in isolation from one another in practice. All relevant inputs as well as sensitivities have then been provided for the key sources of estimation uncertainty. 4.1 Embedded derivatives Eskom entered into agreements to supply electricity to electricity-intensive businesses where the revenue from the contracts is based on approved tariffs with a possible upside charge that is applicable when predefined thresholds are exceeded. These upside charges resulted in option-based embedded derivatives arising from: • Aluminium market price – applicable if both the aluminium price and foreign exchange rate simultaneously exceed predefined thresholds from August 2021 to July 2031. • Ferrochrome market price – applicable when the ferrochrome price exceeds predefined thresholds from January 2024 to December 2029. The valuation of the embedded derivatives reflects the remaining benefit to Eskom attributable to the upside charge when the thresholds are exceeded. Valuation Valuation techniques are used to determine the fair value as there is no active market for embedded derivatives. The embedded derivative is valued independently from the host contract. A Monte Carlo valuation method was used which uses random paths to model the price of commodities (aluminium and ferrochrome) and the USD/ZAR exchange rate. The simulation paths allow for varying prices depending on the underlying simulations being above or below the threshold levels. The fair value of the embedded derivatives reflects a probability-weighted estimate of the upside benefit to Eskom in terms of the Monte Carlo method. Input and valuation assumptions The key valuation approach and methodology used include the following: • Aluminium price forecasting was modelled using the Schwartz 1-factor model and is calibrated to futures prices and at-the-money European options on futures contracts traded on the London Metal Exchange. • Aluminium price and USD/ZAR correlation was modelled by identifying the correlation between the log returns in outlier scenarios which is driven by global economic shocks, where commodities tend to appreciate as the global economy deteriorates. • Ferrochrome price forecasting was modelled by using the Schwartz 1-factor model and by establishing a suitable commodity proxy as there is no exchange market for ferrochrome futures. Nickel was selected as an appropriate commodity proxy as most of the global ferrochrome and nickel resources are used in the production of stainless steel and have similar market dynamics. Nickel is highly correlated with ferrochrome demand. • An assessment through a defined set of criteria was undertaken during the year to establish a suitable proxy for ferrochrome due to the absence of market related data which resulted in a change in proxy from stainless steel to nickel. Nickel has sufficient market data that is available for the full contract period compared to stainless steel where market data was limited to one year. The change in proxy resulted in an increase in the embedded derivative asset of R471 million. • The nickel, aluminium and USD/ZAR volatility was based on implied volatilities of the at-the-money options traded in the market. • Counterparty credit risk was calculated by using the marginal probability of default (using a hazard rate model and calibrated to the counterparty’s credit default swap spread), weighted by the present value of the expected future exposure, at each cash flow date. • Projected cash flows were weighted and discounted at the appropriate risk-free rate by simulating forward USD/ZAR rates (basis adjusted) and underlying commodity price (in US dollar) and then valuing the payoff using Monte Carlo methods. The average of the simulated upside tariffs across the contract supply term structure was discounted to the valuation date using the ZAR three-month swap zero curve. • The United States and South African Producer Price Index (PPI) are significant unobservable inputs used in the model. Other inputs were obtained from appropriate market data providers or were otherwise modelled using market standard modelling procedures which do not attract significant uncertainty or judgement. • Consumption estimates and electricity load factor assumptions were linked to operational expectations in terms of potential contract modifications (including the impact of relaxed take-or-pay criteria), the ferrochrome market downturn and possible customer plant closures. The ferrochrome market, driven by global oversupply, has experienced a significant economic downturn and price decline which resulted in a decrease in operational production (consumption) and implementation of the contractual hardship clause in February 2025 for ferrochrome linked smelters. The hardship clause allowed the customer to give notice and engage with Eskom to consider and agree on an adjustment to the contract. Eskom engaged with NERSA on 17 March 2025 to seek approval for the relaxation of the take-or-pay criteria as per the contract which NERSA approved on 21 July 2025. This allows for reallocation of load between smelters, operational flexibility to the smelters and to elect specific smelter shutdowns based on prevailing market and operational conditions. One of the ferrochrome smelters reflected a complete idle status with halted operations by year end resulting in the derecognition of the related embedded derivative asset of R222 million. Two other smelters were placed on operational suspension and long-term maintenance. The underlying contracts remained in force despite these operational challenges and invoicing continued at the contracted rates. If these smelters were to shut down the embedded derivative asset would reduce by R972 million. ABC 58 The following valuation assumptions were used and are regarded as the best estimates by management: 2025 Year ended 31 March Input Unit 2025 2026 2027 2028 2029 2030 Aluminium price USD per ton 2 518 2 573 2 608 2 644 2 678 2 707 Aluminium volatility Year-on-year (%) 16.99 17.70 17.05 17.05 17.05 17.05 Ferrochrome price USD per ton 1 830 1 890 1 900 1 917 1 949 1 973 Nickel price USD per ton 15 698 16 481 17 193 17 898 18 601 19 356 Nickel volatility Year-on-year (%) 20.85 22.56 25.05 25.05 25.05 25.05 ZAR/USD ZAR per USD 18.31 18.75 19.25 19.82 20.49 20.96 USD/ZAR volatility Year-on-year (%) 13.97 14.20 14.67 14.91 14.91 15.62 Rand interest rates Annual actual/365 days (%) 7.44 8.24 7.72 7.85 8.00 8.19 Dollar interest rates Annual actual/365 days (%) 4.50 4.03 3.77 3.69 3.69 3.68 South African PPI Year-on-year (%) 2.20 2.20 2.50 2.50 2.50 2.50 United States PPI Year-on-year (%) 2.00 1.80 1.60 1.40 1.40 1.30 Electricity usage – aluminium Electricity usage per maximum capacity (%) 97.14 97.14 97.14 97.14 97.14 97.14 Electricity usage – ferrochrome Electricity usage per maximum capacity (%) 58.04 48.72 48.72 48.72 48.72 48.72 2024 Year ended 31 March Input Unit 2024 2025 2026 2027 2028 2029 Aluminium price USD per ton 2 295 2 415 2 536 2 627 2 696 2 744 Aluminium volatility Year-on-year (%) 14.89 17.73 17.95 17.97 17.97 17.97 Ferrochrome price USD per ton 2 150 2 198 2 176 2 144 2 127 2 091 Stainless steel price Chinese yuan per ton 13 915 14 020 – – – – ZAR/USD ZAR per USD 18.94 19.59 20.34 21.26 22.84 23.86 USD/ZAR volatility Year-on-year (%) 9.82 14.78 15.17 15.40 15.40 16.07 Rand interest rates Annual actual/365 days (%) 5.60 9.34 8.56 8.57 8.74 9.08 Dollar interest rates Annual actual/365 days (%) 5.57 5.11 4.61 4.30 4.13 4.02 South African PPI Year-on-year (%) 5.00 4.80 4.60 4.50 4.30 4.20 United States PPI Year-on-year (%) 1.50 1.80 1.60 1.40 1.40 1.30 Electricity usage – aluminium Electricity usage per maximum capacity (%) 97.64 97.64 97.64 97.64 97.64 97.64 Electricity usage – ferrochrome Electricity usage per maximum capacity (%) 79.18 79.18 79.18 79.18 79.18 79.18 Sensitivity analysis The effect on profit/loss before tax of an increase or decrease in the significant assumptions is: Group and company 2025 2024 Input Unit Change in assumption increase decrease increase decrease Rm Rm Rm Rm Aluminium price USD per ton 10% relative 450 (339) 545 (375) Aluminium volatility Index 1% absolute 22 (24) 51 (55) Ferrochrome price USD per ton 10% relative 1 461 (1 173) 2 653 (2 695) Nickel volatility Index 10% relative 108 (108) – – Rand/USD – Aluminium Rand per USD 10% relative 186 (220) 188 (223) Rand interest rates Continuous actual/365 days (%) 100 basis points (26) 27 (10) 10 Dollar interest rates Annual actual/365 days (%) 100 basis points (57) 54 (55) 51 South African PPI Index 1% absolute (38) 6 38 (43) United States PPI Index 1% absolute (92) 58 (193) 237 4.2 Post-employment medical benefits Valuation The estimated present value of the anticipated expenditure for both in-service and retired members is calculated by independent actuaries using the projected unit credit method annually. This method accounts for the accrued service liability separately from the current cost liability. The accrued service liability is based on the completed service to the valuation date for the in-service members and the full liability in respect of retired members. The current cost liability is the cost of providing the benefit over the next year. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. The fund is exposed to inflation risk, interest rate risks and changes in the life expectancy of beneficiaries. ABC 59 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 4. Critical accounting estimates and assumptions (continued) 4.2 Post-employment medical benefits (continued) Valuation (continued) Valuation assumptions The principal actuarial assumptions used were: Group Company Unit 2025 2024 2025 2024 Discount rate % 13.0 15.0 13.0 15.0 Medical aid inflation % 8.7 10.6 8.7 10.6 Male longevity years 14.4 14.4 14.4 14.4 Female longevity years 20.8 20.8 20.8 20.8 Weighted average duration years 17.2 17.1 16.9 16.7 Assumptions regarding future mortality have been based on published mortality tables and statistics derived from experience. Sensitivity analysis The effect of an increase or decrease in the assumptions is: Group Company Change in 2025 2024 2025 2024 assumption increase decrease increase decrease increase decrease increase decrease Rm Rm Rm Rm Rm Rm Rm Rm Effect on aggregate current service cost and finance cost Discount rate 1% (236) 287 (241) 293 (210) 257 (217) 264 Medical aid inflation 1% 533 (429) 510 (413) 483 (389) 466 (377) Future mortality 1 year 71 (72) 70 (71) 66 (67) 66 (67) Effect on post-employment medical benefits obligation Discount rate 1% (2 376) 2 936 (2 067) 2 546 (2 171) 2 677 (1 899) 2 333 Medical aid inflation 1% 2 972 (2 433) 2 579 (2 118) 2 709 (2 222) 2 363 (1 944) Future mortality 1 year 469 (474) 413 (418) 440 (444) 388 (393) 4.3 Pension benefits Valuation The estimated present value of the anticipated expenditure for both in-service and retired members is calculated by independent actuaries using the projected unit credit method annually. This method accounts for the accrued service liability separately from the current cost. The accrued service liability is based on the completed years of service to the valuation date in respect of current in-service members and the full liability in respect of pensioners. The current cost liability is the cost of providing the benefit over the next year. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. The liability is compared to the fair value of the plan assets to determine a resultant deficit or surplus (which would be subject to an asset ceiling). The fair value of the plan assets represents the market value of the assets. The fund is exposed to inflation, interest rate risks, changes in the life expectancy of pensioners, changes in the age profile of members, equity and debt market risk and foreign exchange risk. Valuation assumptions The principal actuarial assumptions used were: Group and company Unit 2025 2024 Discount rate % 13.0 15.0 Long-term price inflation rate % 6.7 8.6 Future salary inflation % 8.2 10.1 Future pension increases % 6.7 8.6 Male longevity years 13.5 13.5 Female longevity years 19.7 19.7 Weighted average duration years 14.5 14.3 Assumptions regarding future mortality have been based on published mortality tables and statistics derived from experience. Sensitivity analysis The effect on fund obligations of an increase or decrease in the assumptions is: Group and company Change in 2025 2024 assumption increase decrease increase decrease Rm Rm Rm Rm Discount rate 1% (7 579) 8 773 (6 834) 7 945 Inflation rate 1% 9 239 (8 063) 8 345 (7 270) Future mortality 1 year (1 799) 1 752 (1 654) 1 612 ABC 60 4.4 Occasional and service leave Valuation An actuarial valuation is done on an annual basis for occasional and service leave. The accrued liability is determined by valuing all future leave expected to be taken and payments to be made in respect of benefits up to the valuation date. Allowance is made for the assumed benefit options employees will exercise and salary increases up to the date the benefit is estimated to be paid. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. Valuation assumptions The principal actuarial assumptions used were: Group and company 2025 2024 % % Discount rate 13.0 15.0 Long-term price inflation rate 6.7 8.6 Salary inflation rate 8.2 10.1 Leave usage 8.0 8.0 Assumptions regarding future mortality have been based on published mortality tables and statistics derived from experience. For details regarding current longevities underlying the values of the occasional and service leave obligation at the reporting date refer to note 4.2. Sensitivity analysis Based on current experience, 8% (2024: 8%) of the leave is utilised. If the rate at which leave is taken is 16% (2024: 16%), then the liability will increase by R112 million (2024: R103 million) for the group and R90 million (2024: R83 million) for the company. If the rate at which leave is taken is 4% (2024: 4%), then the liability will decrease by R64 million (2024: R58 million) for the group and R51 million (2024: R47 million) for the company. The carrying amount of the occasional and service leave liability for the group is R1 447 million (2024: R1 309 million) and R1 125 million (2024: R1 020 million) for the company. 4.5 Power station-related environmental restoration and mine-related closure, pollution control and rehabilitation Valuation These provisions are determined by discounting the current estimated future decommissioning and rehabilitation costs. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. Valuation assumptions and estimated payment dates The real discount rates used for these provisions and estimated payment dates of the costs are: Group and company 2025 2024 % Year % Year Nuclear plant 5.0 2045–20601 4.4–5.1 2025–2039 Coal, pump storage, open cycle gas turbine and renewable stations 4.3–5.0 2027–2099 4.4–5.1 2026–2099 Spent nuclear fuel 4.3–5.0 2026–2100 4.4–5.1 2025–2100 Mine-related closure, pollution control and rehabilitation 4.3–5.0 2026–2159 4.4–5.1 2025–2151 Sensitivity analysis The effect on the provisions of an increase or decrease in the real discount rate is: Group and company 2025 2024 Change in increase decrease increase decrease assumption Rm Rm Rm Rm Nuclear plant 1% (1 048) 1 338 (466) 504 Coal, pump storage, open cycle gas turbine and renewable stations 1% (2 302) 2 874 (2 187) 2 735 Spent nuclear fuel 1% (1 690) 2 471 (1 271) 2 377 Mine-related closure, pollution control and rehabilitation 1% (1 319) 1 724 (1 180) 1 523 4.6 Revenue from contracts with customers Customer connections Connection charges are charged to customers in exchange for connection to the group’s electricity network. This connection enables the group to sell electricity to these customers over the estimated customer relationship period. The customer relationship period refers to the period the customer remains a purchaser of electricity from the group at a given point of supply. A period of 25 years was determined after considering, inter alia, assumptions about the life-cycle of the distribution network used to supply electricity to customers. Collectability of amounts receivable Revenue may only be recognised if it is probable at the time of sale that the revenue is likely to be recovered from the customer. This recoverability requirement is not considered to have been met in contracts with customers who have a poor payment history and for which the group does not have the ability to manage the credit risk due to external facts and circumstances (for example socio-economic or political reasons). The group accounts for revenue from these contracts on a cash (rather than accrual) basis. Where the recoverability requirement is met, revenue is recognised on an accrual basis. The risk of non-collection is reflected in the expected credit loss as an impairment expense rather than an adjustment to the revenue recognised. 1. The licence for Koeberg unit 1 was extended resulting in a change in useful life from 40 to 60 years which reduced the related decommissioning provision. ABC 61 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 4. Critical accounting estimates and assumptions (continued) 4.7 Expected credit loss on financial assets The expected credit loss on financial assets is calculated using the following formula: Expected credit loss = Exposure at default x Probability of default x Discounted loss given default The exposure is the estimated amount outstanding at the point of default less any collateral held. The probability of default measures the likelihood that the amount outstanding will become more than 90 days past due, and depending on the portfolio, this is either on a 12-month or lifetime basis in accordance with IFRS 9 requirements. The loss given default measures the expected credit loss in the event that the outstanding amount becomes more than 90 days past due. Cash flows are discounted at the original effective interest rate over the expected recovery period. The financial assets that are subject to IFRS 9 impairment are stratified using factors such as the balance type, credit risk rating, existence and type of collateral, remaining term to maturity, delinquency status and geographical location. An economic overlay in the form of a five-year forward-looking scaler that incorporates economic variables (including gross domestic product and exchange rate growth) has been applied to international electricity receivables, intercompany trade and other receivables, other receivables, finance lease receivables, loans receivables (excluding home loans and municipal payment arrangements) investments and financial guarantee portfolios. It was not necessary to apply an economic overlay to the municipality, large power and small power user portfolios as the models to determine the probability of default are considered to be sensitive to the economic environment and representative of the most recent economic conditions. An additional expected credit loss consideration continued to be applied to the municipality portfolio for the possible impact of the municipal debt relief arrangement. This additional impairment decreased to R1 002 million (2024: R1 903 million) mainly due to write-offs implemented during the year. The following details are applicable to the models used for the various financial asset balances: Financial asset Model details International electricity Expected credit losses were calculated using a benchmark approach that assigns a probability of default to a client receivables based on the size and country in which the client operates. Credit ratings were assigned to these categories which were then used to determine the probability of default. A five-year economic forward-looking scaler was applied to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Local large and small power Expected credit losses were calculated using a provision matrix which utilises a transition approach. The probability of user electricity receivables default is defined as the likelihood of an obligor defaulting over a future time period. The loss given default approach considers both historical and expected future recoveries in the estimation. Future recoveries are determined based on historical experience and extrapolated to incomplete workouts using a development factor approach. Intercompany loans The expected credit losses were calculated using a dual rating approach, which relies on key financial ratios to receivable determine a through-the-cycle probability of default. The through-the-cycle probability of default was updated with economic information to produce a point-in-time probability of default, which is consistent with the current and future forecasted economic conditions. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Intercompany trade and The estimates of the probability of default were based on the external rating of Eskom mapped to an internal rating other receivables scale. A five-year economic forward-looking scaler was applied to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Other receivables, finance Expected credit losses were calculated using a benchmark approach that assigns a probability of default to a client lease receivables and loans based on the size and country in which the client operates. Credit ratings were assigned to these categories which receivable (excluding were then used to determine the probability of default. A five-year economic forward-looking scaler was applied home loans) to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Loans receivable The estimates of the probability of default are influenced by factors including whether a client is still employed by (home loans) Eskom and whether they are in arrears. Loans are assigned a risk rating based on payment levels. Forward-looking information is based on reasonable and supportable forecasts of future economic conditions, including experience judgement. The loss in the event of default is determined as the difference between the outstanding loan amount and the amount that can be recovered through the legal collection process, which also includes the perfection of physical collateral. The historical loss experience is adjusted for current observable data to determine the loss given default. Investments and financial The estimates of the probability of default were based on the external credit ratings of the counterparts using an guarantees external rating scale mapped to an internal rating scale. A five-year economic forward-looking scaler was applied to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). 5. Financial risk management The group’s integrated risk and resilience management process enables management to assess and respond to all material risks that may affect the achievement of organisational objectives. The group maintains an integrated risk and resilience management framework comprising governance structures, management policies and guidance standards with a focus on risk and resilience assessments, treatment plans, monitoring and reporting. The management of financial risks, as defined by IFRS 7 Financial Instruments: Disclosures, falls within these overarching structures, policies and standards. The management of financial risks is delegated by the board to the audit committee, which provides oversight over the financial reporting risks, and the risk committee which provides oversight over the enterprise risk management framework. Day-to-day management of financial risks is carried out in the area in which the risks arise. ABC 62 The group’s exposure to risk, its objectives, policies and processes for managing the risk and the methods used to measure it have been consistently applied in the years presented. The group has exposure to the following risks as a result of its financial instruments: • credit risk – the risk of financial loss to the group if a customer or other counterparty to a financial instrument fails to meet its contractual obligations • market risk – the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign exchange rates, commodity prices, interest rates or equity prices • liquidity risk – the risk that the group will not have sufficient financial resources to meet its obligations when they fall due or will have to do so at excessive cost 5.1 Credit risk The carrying amounts of financial assets represent the maximum credit exposure. The group’s maximum exposure as a result of financial guarantees issued is disclosed in note 45.1. 5.1.1 Trade and other receivables Impairment analysis 2025 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Trade receivables Group International 2 592 (14) 2 578 573 (516) 57 3 165 (530) 2 635 B- to BB+ 2 468 (9) 2 459 573 (516) 57 3 041 (525) 2 516 Below B- 124 (5) 119 – – – 124 (5) 119 Local large power users – municipalities 14 449 (885) 13 564 6 863 (4 502) 2 361 21 312 (5 387) 15 925 0–30 days 11 778 (433) 11 345 – – – 11 778 (433) 11 345 30–90 days 2 671 (452) 2 219 – – – 2 671 (452) 2 219 More than 90 days or credit impaired – – – 6 863 (4 502) 2 361 6 863 (4 502) 2 361 Local large power users – other 13 093 (39) 13 054 701 (551) 150 13 794 (590) 13 204 0–30 days 12 936 (10) 12 926 – – – 12 936 (10) 12 926 30–90 days 157 (29) 128 – – – 157 (29) 128 More than 90 days or credit impaired – – – 701 (551) 150 701 (551) 150 Local small power users 3 115 (290) 2 825 1 348 (1 055) 293 4 463 (1 345) 3 118 0–30 days 2 583 (138) 2 445 – – – 2 583 (138) 2 445 30–90 days 532 (152) 380 – – – 532 (152) 380 More than 90 days or credit impaired – – – 1 348 (1 055) 293 1 348 (1 055) 293 33 249 (1 228) 32 021 9 485 (6 624) 2 861 42 734 (7 852) 34 882 Other receivables (B- to BB+) 2 391 (93) 2 298 512 (503) 9 2 903 (596) 2 307 35 640 (1 321) 34 319 9 997 (7 127) 2 870 45 637 (8 448) 37 189 Company International B- to BB+ 13 – 13 – – – 13 – 13 Local large power users – municipalities 14 449 (885) 13 564 6 863 (4 502) 2 361 21 312 (5 387) 15 925 0–30 days 11 778 (433) 11 345 – – – 11 778 (433) 11 345 30–90 days 2 671 (452) 2 219 – – – 2 671 (452) 2 219 More than 90 days or credit impaired – – – 6 863 (4 502) 2 361 6 863 (4 502) 2 361 Local large power users – other 13 093 (39) 13 054 701 (551) 150 13 794 (590) 13 204 0–30 days 12 936 (10) 12 926 – – – 12 936 (10) 12 926 30–90 days 157 (29) 128 – – – 157 (29) 128 More than 90 days or credit impaired – – – 701 (551) 150 701 (551) 150 Local small power users 3 115 (290) 2 825 1 348 (1 055) 293 4 463 (1 345) 3 118 0–30 days 2 583 (138) 2 445 – – – 2 583 (138) 2 445 30–90 days 532 (152) 380 – – – 532 (152) 380 More than 90 days or credit impaired – – – 1 348 (1 055) 293 1 348 (1 055) 293 30 670 (1 214) 29 456 8 912 (6 108) 2 804 39 582 (7 322) 32 260 Other receivables (B- to BB+) 23 995 (326) 23 669 256 (256) – 24 251 (582) 23 669 54 665 (1 540) 53 125 9 168 (6 364) 2 804 63 833 (7 904) 55 929 ABC 63 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.1 Trade and other receivables (continued) Impairment analysis (continued) 2024 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Trade receivables Group International 1 706 (11) 1 695 691 (586) 105 2 397 (597) 1 800 B- to BB+ 1 576 (7) 1 569 691 (586) 105 2 267 (593) 1 674 Below B- 130 (4) 126 – – – 130 (4) 126 Local large power users – municipalities 16 496 (838) 15 658 3 783 (3 521) 262 20 279 (4 359) 15 920 0–30 days 10 641 (128) 10 513 – – – 10 641 (128) 10 513 30–90 days 5 855 (710) 5 145 – – – 5 855 (710) 5 145 More than 90 days or credit impaired – – – 3 783 (3 521) 262 3 783 (3 521) 262 Local large power users – other 12 206 (28) 12 178 662 (566) 96 12 868 (594) 12 274 0–30 days 12 082 (6) 12 076 – – – 12 082 (6) 12 076 30–90 days 124 (22) 102 – – – 124 (22) 102 More than 90 days or credit impaired – – – 662 (566) 96 662 (566) 96 Local small power users 2 879 (207) 2 672 1 313 (984) 329 4 192 (1 191) 3 001 0–30 days 2 440 (89) 2 351 – – – 2 440 (89) 2 351 30–90 days 439 (118) 321 – – – 439 (118) 321 More than 90 days or credit impaired – – – 1 313 (984) 329 1 313 (984) 329 33 287 (1 084) 32 203 6 449 (5 657) 792 39 736 (6 741) 32 995 Other receivables (B- to BB+) 2 489 (53) 2 436 544 (539) 5 3 033 (592) 2 441 35 776 (1 137) 34 639 6 993 (6 196) 797 42 769 (7 333) 35 436 Company International B- to BB+ 15 – 15 – – – 15 – 15 Local large power users – municipalities 16 496 (838) 15 658 3 783 (3 521) 262 20 279 (4 359) 15 920 0–30 days 10 641 (128) 10 513 – – – 10 641 (128) 10 513 30–90 days 5 855 (710) 5 145 – – – 5 855 (710) 5 145 More than 90 days or credit impaired – – – 3 783 (3 521) 262 3 783 (3 521) 262 Local large power users – other 12 206 (28) 12 178 662 (566) 96 12 868 (594) 12 274 0–30 days 12 082 (6) 12 076 – – – 12 082 (6) 12 076 30–90 days 124 (22) 102 – – – 124 (22) 102 More than 90 days or credit impaired – – – 662 (566) 96 662 (566) 96 Local small power users 2 879 (207) 2 672 1 313 (984) 329 4 192 (1 191) 3 001 0–30 days 2 440 (89) 2 351 – – – 2 440 (89) 2 351 30–90 days 439 (118) 321 – – – 439 (118) 321 More than 90 days or credit impaired – – – 1 313 (984) 329 1 313 (984) 329 31 596 (1 073) 30 523 5 758 (5 071) 687 37 354 (6 144) 31 210 Other receivables (B- to BB+) 4 350 (54) 4 296 257 (254) 3 4 607 (308) 4 299 35 946 (1 127) 34 819 6 015 (5 325) 690 41 961 (6 452) 35 509 ABC 64 ECL percentages used Group Company 2025 2024 2025 2024 Stage 2 Stage 3 Stage 2 Stage 3 Stage 2 Stage 3 Stage 2 Stage 3 % % % % % % % % Trade receivables International 1 90 1 85 – – 1 85 B- to BB+ – 90 – 85 – – – 85 Below B- 4 – 3 – – – 3 – Local large power users – municipalities 6 66 5 93 6 66 5 93 0–30 days 4 – 1 – 4 – 1 – 30–90 days 17 – 12 – 17 – 12 – More than 90 days or credit impaired – 66 – 93 – 66 – 93 Local large power users – other – 79 – 85 – 79 – 85 30–90 days 18 – 18 – 18 – 18 – More than 90 days or credit impaired – 79 – 85 – 79 – 85 Local small power users 9 78 7 75 9 78 7 75 0–30 days 5 – 4 – 5 – 4 – 30–90 days 29 – 27 – 29 – 27 – More than 90 days or credit impaired – 78 – 75 – 78 – 75 4 70 3 88 4 69 3 88 Other receivables 4 98 2 99 1 100 1 99 Age analysis of trade receivables balances 2025 2024 <1 year >1 year >2 years >3 years <1 year >1 year >2 years >3 years % % % % % % % % Group International 99 1 – – 87 12 1 – Local large power users – municipalities 93 – 7 – 90 8 2 – Local large power users – other 97 1 2 – 97 3 – – Local small power users 87 7 3 3 86 8 3 3 Company International 100 – – – 100 – – – Local large power users – municipalities 93 – 7 – 90 8 2 – Local large power users – other 97 1 2 – 97 3 – – Local small power users 87 7 3 3 86 8 3 3 ABC 65 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.1 Trade and other receivables (continued) Reconciliation of movements in allowance for impairment 2025 2024 Stage 2 Stage 3 Total Stage 2 Stage 3 Total Note Rm Rm Rm Rm Rm Rm Group Balance at beginning of the year 1 137 6 196 7 333 441 4 258 4 699 Raised to the income statement 36 321 6 992 7 313 794 2 006 2 800 Reversed on payment of opening balance (492) (1 922) (2 414) (343) (2 557) (2 900) Remeasurement of opening balances held at year end 4 267 271 2 759 761 Raised on new balances 809 8 647 9 456 1 135 3 804 4 939 Transfer of balances between stage 2 and 3 (109) 109 – (75) 75 – Finance income on stage 3 balances – 541 541 – 231 231 Derecognised – (5 722) (5 722) – – – Write-offs (28) (989) (1 017) (23) (374) (397) Balance at end of the year 20 1 321 7 127 8 448 1 137 6 196 7 333 Company Balance at beginning of the year 1 127 5 325 6 452 519 4 195 4 714 Raised to the income statement 36 546 7 096 7 642 715 1 980 2 695 Reversed on payment of opening balance (461) (1 313) (1 774) (382) (2 515) (2 897) Remeasurement of opening balances held at year end 8 267 275 (11) 743 732 Raised on new balances 999 8 142 9 141 1 108 3 752 4 860 Transfer of balances between stage 2 and 3 (109) 109 – (65) 65 – Finance income on stage 3 balances – 541 541 – 231 231 Derecognised – (5 722) (5 722) – – – Write-offs (24) (985) (1 009) (22) (381) (403) Disposal of business – – – (20) (765) (785) Balance at end of the year 20 1 540 6 364 7 904 1 127 5 325 6 452 Security held for trade receivables (guarantees and deposits) Group and company 2025 2024 Fair value of security held Security Rene- Fair value of security held Security Rene- Credit- Not Total called gotiated Credit- Not Total called gotiated impaired credit- upon balances impaired credit- upon balances impaired impaired Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm International – 9 9 – – – 7 7 – – Local large power users 462 21 701 22 163 78 1 718 370 17 898 18 268 44 2 331 Municipalities 418 1 331 1 749 2 1 696 329 895 1 224 2 2 309 Other 44 20 370 20 414 76 22 41 17 003 17 044 42 22 Local small power users 185 3 119 3 304 151 83 181 2 972 3 153 152 69 Soweto 12 – 12 – – 11 – 11 4 – Other 173 3 119 3 292 151 83 170 2 972 3 142 148 69 647 24 829 25 476 229 1 801 551 20 877 21 428 196 2 400 Additional information Trade receivables Credit risk attributable to trade receivables is assessed considering the following counterparty characteristics: • geographic location of the customer (both internationally and within South Africa) • size of demand (large or small power user) • receivable ageing profile • security held (deposits and guarantees) • payment history ABC 66 Many residential customers are on a prepaid basis, thereby eliminating credit risk relating to these customers. The group has well established credit control measures for conventional customers that include: • increased security deposits and guarantees • conversion of customers to prepayment • early identification of and engagement with non-paying customers • negotiation of mutually acceptable payment arrangements • disconnection of supply • use of debt collectors • taking legal measures such as issuing letters of demand and pursuing adverse listing of defaulting customers All billed customers must provide security. This requirement can only be deviated from based on sound business decisions. The granting of deviations for a customer must be approved in line with the revenue security policy. Progress on the collection process is regularly reviewed. Strict procedures are in place governing the write-off of trade receivables. Write-offs are considered where balances are assessed to not be collectable (for example deceased customers and businesses in liquidation after completion of business rescue). Outstanding amounts after recovery from the security held are written off once the relevant governance and legal collection processes have been followed. The process of recovery continues unless it is confirmed that there is no prospect of recovery or the costs of such action will exceed the benefits to be derived. The main classes of trade receivables are: International customers Electricity supply agreements are entered into with key international customers who comprise utility companies, governments of neighbouring countries and sundry large power users. Their payment terms are between 10 and 45 days. Impairment is assessed based on the country-specific risk. International customers are not required to provide upfront security. If they default, new payment arrangements are negotiated or supply is curtailed. Certain international customers may be required to pay upfront when their credit risk profile has changed. There were no material changes to the expected credit loss percentages for international customers compared to the prior year. Local large power users Local large power users comprise South African redistributors (metropolitan and municipal) and commercial, industrial and mining customers usually with supplies above 100kVA. Payment terms are individually negotiated and are normally a maximum of 15 days, except for certain bulk redistributing municipalities which are at a maximum of 30 days. Municipalities are required to provide security for all new supplies or where they request an upgrade of existing supply points. Where a large power user has an acceptable credit rating from an approved rating agency, the provision of security is amended based on the type of risk as defined in the revenue security policy. The group continues its efforts to ensure maximum collection from non-paying municipalities. These attempts are unfortunately hampered by drawn out litigation and interdicts granted by the courts in the interest of municipal end-consumers. The group is advocating an active partnering solution whereby Eskom supports municipalities with distribution, reticulation and revenue collection services. Interventions include: • tracking and monitoring compliance status of the municipal debt relief programme that commenced during 2024 • credit management processes • entering into payment arrangements • promoting and implementing solutions for municipalities through active partnering agreements • following the Promotion of Administrative Justice Act, 3 of 2000, processes to restrict, interrupt or terminate supply where no other options are available • restricting electricity supply if the set maximum demand levels are exceeded • issuing of summonses and legal interventions • government intervention (participation at inter-ministerial task team subcommittees, National Treasury and the Eskom shareholder representative) National Treasury issued an amendment to the municipal debt relief conditions on 13 August 2025 that allows for a municipality to catch up on outstanding payments after the close of the write-off cycle. National Treasury issued instruction letters to Eskom during the year to write-off one-third of the ringfenced debt for 14 municipalities to the value of R3.5 billion. Five of these municipalities only complied with the conditions of the municipal debt relief programme after the amendment of the conditions and R3 billion will be written off in the 2026 financial year. The rest of the 14 municipalities met the conditions in the compliance cycle resulting in a total write-off of R0.5 billion during the year. A further five municipalities met the compliance cycle conditions during the year with another five municipalities meeting the conditions in May 2025 and August 2025. Write-off instructions for these municipalities were received from National Treasury on 24 June 2025, 7 August 2025 and 22 August 2025 respectively. The related write-off of R0.6 billion will be processed in 2026. Breach notices have been issued to 59 of the 63 non-compliant municipalities during the year. Engagements are taking place with the parties involved, including National Treasury, for municipalities that defaulted on the municipal debt relief conditions. Letters of pending termination were issued by National Treasury to certain non-compliant municipalities during the year as a warning. No municipalities have to date been removed by National Treasury from the municipal debt relief programme. Municipalities that are removed from the debt relief programme will become liable for their remaining arrear debt including subsequent interest and penalties. The remaining ring-fenced municipal debt relief debt at 31 March 2025 was R55.1 billion (2024: R56.0 billion) of which R54.0 billion (2024: R53.8 billion) related to municipalities accounted for on the cash basis in terms of IFRS 15 with no further financial impact expected thereon as any future write-offs will offset against previous revenue and interest not recognised. The remaining arrear debt balance of R1.1 billion consisting of arrear debt of R1.0 billion and VAT of R0.1 billion (2024: R2.2 billion) was fully impaired at 31 March 2025. The City of Tshwane metropolitan municipality entered into a long-term payment arrangement with Eskom during the year for the settlement of overdue debt over a five-year period. The payment arrangement was assessed as a financial asset contract modification and resulted in the derecognition of the trade receivable and the recognition of a loan receivable as the modification was qualitatively substantial. Refer to note 5.1.5 and note 15. There were no other material changes to the expected credit loss percentages compared to the prior year. ABC 67 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.1 Trade and other receivables (continued) Additional information (continued) Trade receivables (continued) Local small power users Local small power users comprise local customers that have a supply of 100kVA or less in size. Payment terms for small power customers are 30 days. New customers are required to provide security equivalent to consumption of between one to three months at the commencement of the supply agreement. The level of security is reviewed if a customer defaults on its payment obligation or requires additional electricity supply capacity. Additional security is required in these instances to cover between one to three months of recent consumption before supply will commence. All new customers will preferably be on prepayment terms. The residential revenue management strategy continues to be implemented with a focus on converting customers to prepaid. There were no material changes to the expected credit loss percentages for small power users compared to the prior year. Other receivables Other receivables comprise various sundry receivables. There are no significant balances with specific repayment terms. No security is held in respect of these balances and no interest has been charged on overdue balances. There were no material changes to the expected credit loss percentages compared to the prior year. 5.1.2 Derivatives held for risk management and cash and cash equivalents Impairment analysis 2025 2024 Not Subject to Total Not Subject to Total subject to impairment subject to impairment impairment Stage 1 impairment Stage 1 Rm Rm Rm Rm Rm Rm Group Derivatives held for risk management 15 345 – 15 345 27 016 – 27 016 BBB- to AAA 6 644 – 6 644 11 020 – 11 020 B- to BB+ 8 701 – 8 701 15 996 – 15 996 Cash and cash equivalents – 63 761 63 761 – 23 585 23 585 BBB- to AAA – 8 673 8 673 – 2 328 2 328 B- to BB+ – 55 060 55 060 – 21 253 21 253 Unrated – 28 28 – 4 4 Company Derivatives held for risk management 15 395 – 15 395 27 043 – 27 043 BBB- to AAA 6 644 – 6 644 11 047 – 11 047 B- to BB+ 8 751 – 8 751 15 996 – 15 996 Cash and cash equivalents – 62 757 62 757 – 22 965 22 965 BBB- to AAA – 8 674 8 674 – 1 746 1 746 B- to BB+ – 54 077 54 077 – 21 215 21 215 Unrated – 6 6 – 4 4 The gross values of cash and cash equivalents approximate its carrying value as the impairments calculated are immaterial. The Treasury Risk Committee manages credit risk arising from the treasury department’s activities in the financial markets with the objective of maximising the rate of return on investments while not exceeding approved levels of credit risk exposure. It is chaired by the general manager of treasury, as delegated by the chief financial officer, and reports on a quarterly basis to Exco. The terms of reference of the Treasury Risk Committee (maintained and approved by the chief financial officer) are aligned to the Exco credit risk governance standards and supplemented by appropriate policies and procedures. Specific activities undertaken by the Treasury Risk Committee include the following: • assessing the credit quality of counterparties and approving credit limits based on this assessment • monitoring the adherence to credit limits • approving methodologies for the management of counterparty exposure • ensuring that, where applicable, transactions with counterparties are supported by trading agreements • facilitating and managing the issuing of financial guarantees by the group The portfolio assessment section within the treasury function provides regular feedback on all treasury credit risk-related matters to assist the Treasury Risk Committee to discharge its mandate. ABC 68 The management of credit risk is governed by the following policies: • trading in financial instruments is only conducted with selected counterparties after credit limits have been authorised • financial institutions and/or counterparties with an independent minimum rating of A1 are preferred for investments. If there are no independent ratings, the credit quality of the counterparty is assessed, taking into account its financial position, past experience and other factors • all exposures are based on mark-to-market values. Transaction or close-out netting takes place in accordance with the terms and conditions of the underlying trading agreements • minimum credit rating requirements for financial institutions are maintained to assess the risk categories by rating class and to ascertain the probability of default inherent in each rating class • approved concentration risk parameters and collateral management procedures are in place. Concentration of credit risk is managed by setting credit risk limits at a counterparty-specific level. Concentration credit risk limits are used as second tier limits in relation to counterparty credit limits. Counterparty- specific exposure is monitored against a set concentration of credit risk limits in relation to the total credit risk exposure to all counterparties Risk is measured by determining a default probability per counterparty using default probabilities assessed by rating agencies for various types of credit ratings. These default probabilities are then applied to the market value of the investment placed to determine the capital at risk. The treasury department’s policies and practices are designed to preserve the independence and integrity of decision-making and ensure credit risks are accurately assessed, properly approved, continually monitored and actively managed. The following are monitored and reported on: • aggregate credit risk exposure • limits utilisation including any breaches • hold-limit exceptions • risk profile changes • risk concentrations Where the credit risk of a particular counterparty has increased, a reassessment of the valuation of the instrument is made for the following factors: • significance of financial difficulty • probability of bankruptcy • probability of breach of contract 5.1.3 Investments Impairment analysis Not Subject to impairment Total subject to Stage 1 impairment Gross Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm Rm 2025 Group Treasury investments B- to BB+ – 2 649 (11) 2 638 2 649 (11) 2 638 Insurance investments 1 869 20 528 (79) 20 449 22 397 (79) 22 318 BBB- to AAA – 1 802 – 1 802 1 802 – 1 802 B- to BB+ – 18 726 (79) 18 647 18 726 (79) 18 647 Not subject to credit risk 1 869 – – – 1 869 – 1 869 1 869 23 177 (90) 23 087 25 046 (90) 24 956 Company Treasury investments B- to BB+ – 2 649 (11) 2 638 2 649 (11) 2 638 2024 Group Treasury investments B- to BB+ – 1 028 (4) 1 024 1 028 (4) 1 024 Insurance investments 1 550 16 986 (34) 16 952 18 536 (34) 18 502 BBB- to AAA – 3 173 – 3 173 3 173 – 3 173 B- to BB+ – 13 813 (34) 13 779 13 813 (34) 13 779 Not subject to credit risk 1 550 – – – 1 550 – 1 550 1 550 18 014 (38) 17 976 19 564 (38) 19 526 Company Treasury investments B- to BB+ – 1 028 (4) 1 024 1 028 (4) 1 024 Eskom invested in a long-term fixed deposit to phase in the funding for the nuclear decommissioning provision over the remaining life of Koeberg power station in line with nuclear regulations in South Africa. Investments in fixed deposits are made with banks with an investment-grade credit rating. The credit risk associated with the counterparty’s credit rating is managed in line with the treasury risk framework and forms part of the treasury department’s activities discussed in note 5.1.2. ABC 69 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.3 Investments (continued) There were no material changes to the expected credit loss percentages compared to the prior year. Escap invests in listed shares, negotiable certificates of deposit, floating rate notes and inflation-linked bonds to satisfy its capital adequacy requirements in line with insurance regulations in South Africa. The listed shares do not expose the group to credit risk. The objective is to invest negotiable certificates of deposit in banks with an investment-grade credit rating. The group uses the highest available investment grade where investment-grade ratings are not available. 5.1.4 Finance lease receivables Impairment analysis Stage 1 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm 2025 Group B- to BB+ 177 (2) 175 – – – 177 (2) 175 Company B- to BB+ 94 (1) 93 – – – 94 (1) 93 2024 Group B- to BB+ 212 (1) 211 1 (1) – 213 (2) 211 Company B- to BB+ 131 – 131 1 (1) – 132 (1) 131 There were no material changes to the expected credit loss percentages compared to the prior year. The supply of electricity to customers may be in the form of either a standard or premium power supply. A standard power supply is the least life-cycle cost technically acceptable solution as defined in the Grid Code and the Distribution Network Code whereas with a premium supply the customer’s connection requirement exceeds the specifications of a standard supply. This is achieved through the installation of premium supply equipment for which the customer is required to pay a connection charge. Connection charges for premium supply contracts were repayable on a monthly basis over a maximum period of 25 years. This payment option is no longer available for new premium supplies as the connection charges are payable upfront. The standard payment terms for trade receivables are also applied to the premium supply equipment connection charge customers. The credit risk exposure resulting from premium supply contracts is managed by monitoring payment levels of the customer’s trade receivable balance. There were no significant overdue or distressed balances relating to finance lease receivables in the current or prior financial year. Security in the form of bank guarantees is required from customers before the asset is constructed and is in place for a maximum period of 14 years to cover irrecoverable costs in the event of early termination of the supply contract. In addition, the premium supply equipment serves as security for the outstanding finance lease receivable balance. 5.1.5 Loans receivable Impairment analysis Stage 1 Purchased or originated Total credit impaired Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm 2025 Group Municipal payment arrangement CCC- to CCC+ – – – 1 864 – 1 864 1 864 – 1 864 Other loans B- to BB+ 28 – 28 – – – 28 – 28 28 – 28 1 864 – 1 864 1 892 – 1 892 Company Loans to subsidiaries B- to BB+ 37 956 (419) 37 537 – – – 37 956 (419) 37 537 Municipal payment arrangement CCC- to CCC+ – – – 1 864 – 1 864 1 864 – 1 864 37 956 (419) 37 537 1 864 – 1 864 39 820 (419) 39 401 ABC 70 Stage 1 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value for value impairment impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm 2024 Group Home loans 6 979 (15) 6 964 360 (3) 357 336 (265) 71 7 675 (283) 7 392 B- to BB+ 6 979 (15) 6 964 360 (3) 357 – – – 7 339 (18) 7 321 Below B- – – – – – – 336 (265) 71 336 (265) 71 Other loans 381 (2) 379 1 – 1 3 (2) 1 385 (4) 381 B- to BB+ 381 (2) 379 1 – 1 – – – 382 (2) 380 Below B- – – – – – – 3 (2) 1 3 (2) 1 7 360 (17) 7 343 361 (3) 358 339 (267) 72 8 060 (287) 7 773 Company Loans to subsidiaries B- to BB+ 39 847 (422) 39 425 – – – – – – 39 847 (422) 39 425 Reconciliation of movements in allowance for impairment 2025 2024 Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Note Rm Rm Rm Rm Rm Rm Rm Rm Group Balance at beginning of the year 17 3 267 287 6 22 37 65 Raised to the income statement 36 (9) 4 (20) (25) 12 (6) 228 234 Reversed on payment of opening balance – – (4) (4) – 1 (3) (2) Remeasurement of opening balances held at year end (14) (1) (54) (69) (7) (9) 197 181 Raised on new balances 5 5 38 48 19 2 34 55 Transfer of balances between stages (5) (2) 7 – (1) (13) 14 – Assets and liabilities held-for-sale (3) (3) (243) (249) – – – – Write-offs – (2) (11) (13) – – (12) (12) Balance at end of the year 15 – – – – 17 3 267 287 Company Balance at beginning of the year 422 – – 422 7 – – 7 Raised to the income statement 36 (5) – – (5) 416 – – 416 Reversed on payment of opening balance – – – – (7) – – (7) Raised on new balances (5) – – (5) 423 – – 423 Write-offs 2 – – 2 (1) – – (1) Balance at end of the year 15 419 – – 419 422 – – 422 Municipal payment arrangement The municipal payment arrangement consists of a five-year interest free loan with the City of Tshwane metropolitan municipality for the settlement of overdue debt. The arrangement has been recognised on initial recognition as purchased or originated credit-impaired where the carrying value includes the initial expected credit loss. There have been no changes in the lifetime expected credit loss since initial recognition. The purchased or originated credit-impaired asset was recognised at R4.2 billion including a loss allowance of R2.3 billion (undiscounted R3.7 billion) which was recognised against the carrying value as required for purchased or originated credit-impaired assets. Loans to subsidiaries Loans to subsidiaries consist of loans by Eskom to subsidiaries, mainly to NTCSA, EFC and ERI. The Treasury Risk Committee manages credit risk arising from loans to subsidiaries to reduce the costs for the group and continuously monitor the liquidity and solvency of the group. The term loan to NTCSA has a maturity date of June 2042 and is repayable quarterly. Finance costs are charged based on Eskom’s underlying weighted average cost of servicing the relevant external debt incurred by Eskom to finance the loan. NTCSA provided an upstream guarantee to impacted lenders of Eskom due to the disposal of assets to NTCSA. The upstream guarantee is limited to the net asset value of NTCSA. The ERI loan has been refinanced by Eskom and is repayable on 26 March 2027. The loan to EFC is a revolving facility with no fixed repayment terms and it is expected to be settled in 2026 from the proceeds of the sale of the EFC disposal group. Refer to note 23. There were no material changes to the expected credit loss percentages compared to the prior year. ABC 71 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.5 Loans receivable (continued) Assets held-for-sale Stage 1 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value for value impairment impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm 2025 Group Home loans 6 884 (2) 6 882 303 (3) 300 384 (238) 146 7 571 (243) 7 328 B- to BB+ 6 884 (2) 6 882 303 (3) 300 – – – 7 187 (5) 7 182 Below B- – – – – – – 384 (238) 146 384 (238) 146 Other loans 432 (1) 431 2 – 2 5 (5) – 439 (6) 433 B- to BB+ 432 (1) 431 2 – 2 – – – 434 (1) 433 Below B- – – – – – – 5 (5) – 5 (5) – 7 316 (3) 7 313 305 (3) 302 389 (243) 146 8 010 (249) 7 761 EFC provides loan facilities mainly for the purchase of immoveable property to the employees of the group. Credit risk policies are in place requiring employees to meet various criteria on valuation, affordability and credit history in compliance with the National Credit Act, 34 of 2005, before they are granted home loans. Home loans are extended up to a maximum of 112% of the market value of the property being purchased to cater for bond and transfer costs. Credit risk exposure is mitigated by having: • recourse to the value of the underlying properties through mortgage contracts • monthly instalments deducted from the salaries of employees Credit risk is re-assessed when an employee leaves the service of the group. Ex-employees may make arrangements for a monthly debit order or over-the-counter deposits to settle monthly instalments. EFC closely monitors properties held as collateral where the related loans are considered to be credit-impaired in order to mitigate potential credit losses. Group Unit 2025 2024 Carrying value of credit-impaired balances Rm 146 71 Fair value of properties held as security for credit-impaired loans Rm 386 347 Weighted average loan to value ratio % 88 86 Average repayment period years 16 17 Eskom guarantees all losses that EFC incurs where the loan granted by EFC exceeded 80% of the market value of the property at the time of origination. Refer to note 45 for details regarding this guarantee. 5.2 Market risk A significant part of market risk encountered by the group arises from financial instruments that are managed centrally within the group’s treasury department. The objective of the group’s market risk management framework is to protect and enhance the statements of financial position and profit or loss by managing and controlling market risk exposures and to optimise the funding of business operations and facilitate capital expansion. The basis for calculating risk and sensitivity measures are consistent with the prior year. Sensitivity analyses assumes that only the input being analysed changes with all other variables remaining constant. Financial instruments mainly managed by the treasury department The treasury department is responsible for managing market risk within the risk management framework approved by Exco and the board. The overall authority for the management of market risks within the treasury department is vested in the Treasury Risk Committee. Measurement and reporting occurs on a daily and/or monthly basis and is performed by an independent section within the treasury department. Financial derivatives are used to manage market risk. Financial instruments managed by various divisions and subsidiaries of Eskom Market risk arises mainly from changes in foreign exchange rates and, to a limited extent, commodity and equity prices. The divisions and subsidiaries of Eskom are responsible for identifying the exposure arising from these risks. They liaise with the centralised treasury department to hedge (economic and cash flow hedges) these exposures appropriately on their behalf. 5.2.1 Currency risk Currency risk arises primarily from purchasing imported goods and services directly from overseas or indirectly via local suppliers, foreign sales and foreign borrowings. The group is exposed to foreign exchange risk arising from future commercial transactions and recognised assets and liabilities that are denominated in a currency other than the functional currency of the group. All transactions in excess of R150 000 are hedged (ie economic or cash flow hedges). Currency exposure is identified by the business and hedged and managed by the central treasury department. Hedging instruments consist of cross-currency swaps and forward exchange contracts. Most of the forward exchange contracts have a maturity of less than one year from the reporting date and are rolled over at maturity when necessary. Hedging instruments are entered into once the exposure is firm and ascertainable. ABC 72 Foreign currency exposure (notional amounts in millions per currency) EUR USD GBP CNY JPY NOK SEK 2025 Group Liabilities Debt securities and borrowings (659) (6 633) – (2 792) – – – Trade and other payables (65) (25) – – – (2) (17) Gross statement of financial position exposure (724) (6 658) – (2 792) – (2) (17) Estimated forecast purchases1 (249) (442) (25) – (641) (4) (170) Gross exposure (973) (7 100) (25) (2 792) (641) (6) (187) Derivatives held for risk management 2 956 7 091 25 2 792 641 5 185 Net exposure (17) (9) – – – (1) (2) Company Liabilities Debt securities and borrowings (659) (6 633) – (2 792) – – – Trade and other payables (35) (18) – – – (2) (4) Gross statement of financial position exposure (694) (6 651) – (2 792) – (2) (4) Estimated forecast purchases1 (238) (345) (25) – (641) (4) (151) Gross exposure (932) (6 996) (25) (2 792) (641) (6) (155) Derivatives held for risk management 2 915 6 987 25 2 792 641 5 153 Net exposure (17) (9) – – – (1) (2) Mid-spot rate for one unit of the currency to the rand 19.81 18.31 23.66 2.52 0.12 1.74 1.82 2024 Group Liabilities Debt securities and borrowings (938) (8 199) – – – – – Trade and other payables (71) (32) – – (40) – (3) Gross statement of financial position exposure (1 009) (8 231) – – (40) – (3) Estimated forecast purchases1 (246) (375) (22) – – (16) (313) Gross exposure (1 255) (8 606) (22) – (40) (16) (316) Derivatives held for risk management 2 1 238 8 588 22 – 40 3 312 Net exposure (17) (18) – – – (13) (4) Company Liabilities Debt securities and borrowings (938) (8 199) – – – – – Trade and other payables (62) (26) – – (40) – (2) Gross statement of financial position exposure (1 000) (8 225) – – (40) – (2) Estimated forecast purchases1 (216) (332) (22) – – (16) (271) Gross exposure (1 216) (8 557) (22) – (40) (16) (273) Derivatives held for risk management 2 1 200 8 539 22 – 40 3 268 Net exposure (16) (18) – – – (13) (5) Mid-spot rate for one unit of the currency to the rand 20.51 18.98 23.99 – 0.13 1.75 1.78 1. Represents future purchases contracted for. 2. Includes notional value and accrued interest. ABC 73 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.2 Market risk (continued) 5.2.1 Currency risk (continued) Sensitivity analysis Group Company 2025 2024 2025 2024 1% 1% 1% 1% 1% 1% 1% 1% increase decrease increase decrease increase decrease increase decrease Rm Rm Rm Rm Rm Rm Rm Rm Profit/(loss) before tax ZAR/EUR exposure 47 (47) 37 (37) 39 (39) 37 (37) ZAR/USD exposure 132 (132) 153 (153) 114 (114) 153 (153) ZAR/other currency 6 (6) 4 (4) 6 (6) 4 (4) Equity ZAR/EUR exposure 15 (15) 27 (27) 15 (15) 27 (27) ZAR/USD exposure 33 (33) 13 (13) 33 (33) 13 (13) ZAR/other currency 5 (5) 8 (8) 5 (5) 8 (8) 5.2.2 Commodity risk The group is exposed to commodity risk where commodities are either used directly (liquid fuels) or indirectly as a component of plant, equipment or inventory (eg aluminium, copper or steel). The exposures are hedged economically by means of commodity forwards and options. Economic hedging is applied where it is practical (a relevant hedging instrument exists) based on the optimal economic solution and in compliance with the South African Reserve Bank requirements. Commodities used directly The group is exposed to price risk on diesel (low sulphur gas oil) used in the generation of electricity at the OCGT power stations and on fuel oil (bunker fuel oil) used to manage the temperature of heat generating components at the coal-fired power stations. Prices are determined by the Department of Mineral and Petroleum Resources based on the price of brent crude oil, refining margins and US dollar exchange rates. Commodities used indirectly The group had no material exposure to commodities that formed a part of plant, equipment or inventory. A small exposure was recognised in the prior year, mainly copper. Commodity exposure Group and company 2025 2024 Estimated Derivatives Net Estimated Derivatives Net forecast held for risk exposure forecast held for risk exposure purchases management purchases management Unit (notional) (notional) Low sulphur gas oil kilo litres 431 680 (103 000) 328 680 736 342 (204 000) 532 342 Copper tons – – – 22 (22) – The notional volumes of the derivatives held for risk management are as follows: Group and company 2025 2024 Net asset/ Net asset/ Unit (liability) (liability) Commodity swaps kilo litres (72 000) (278 000) Zero-cost collar kilo litres (21 000) – Call options kilo litres (10 000) 74 000 (103 000) (204 000) Sensitivity analysis The group is exposed mainly to changes in the price of brent crude oil and US dollar exchange rates. The sensitivity analysis has been performed assuming that all other variables remain constant and the possible impact on profit or loss is: Group and company 2025 2024 Change in increase decrease increase decrease Input Unit assumption Rm Rm Rm Rm ZAR/USD ZAR per USD 10% relative 66 (66) 326 (326) Low sulphur gas oil price USD per metric ton 10% relative 66 (66) 326 (326) ABC 74 5.2.3 Interest rate risk Interest rate risk is the risk that the group’s financial position may be adversely affected as a result of changes in interest rate levels, yield curves and spreads. Debt securities and borrowings and derivatives held for risk management at variable rates expose the group to cash flow risk and those at fixed rates expose the group to fair value risk. The group’s policy is to restrict the maximum effective portion of the external debt (excluding the trading portfolio which is managed within the constraints of the risk management framework) exposed to an interest rate reset within the next 12-month period to 40%. The group’s quantitative exposure to interest rate risk is disclosed in note 25. Sensitivity analysis The group analyses its interest rate exposure on a dynamic basis by conducting a sensitivity analysis. This involves determining the impact on profit or loss of defined interest rate shifts. The same interest rate shift is used for each simulation for all currencies. The sensitivity analysis for interest rate risk excludes finance costs capitalised. The simulation is performed on a monthly basis to verify that the maximum loss potential is within the limit set by management. The results of the simulation are included in the table below: Group Company 2025 2024 2025 2024 +100 -100 +100 -100 +100 -100 +100 -100 basis points basis points basis points basis points basis points basis points basis points basis points Rm Rm Rm Rm Rm Rm Rm Rm Profit/(loss) before tax ZAR interest rates 1 548 (1 612) 1 243 (1 303) 1 201 (1 242) 1 236 (1 296) EUR interest rates (77) 79 (63) 32 (74) 76 (59) 28 USD interest rates (1 525) 1 602 (1 639) 1 722 (1 515) 1 591 (1 635) 1 718 Other currency interest rates (86) 88 (1) 1 (86) 88 (1) 1 Equity ZAR interest rates 1 439 (1 501) 1 886 (1 975) 1 439 (1 501) 1 886 (1 975) EUR interest rates (224) 235 (325) 342 (224) 235 (325) 342 USD interest rates (1 712) 1 793 (2 429) 2 556 (1 712) 1 793 (2 429) 2 556 Fixed and floating rate debt Group and company 2025 2024 fixed floating fixed floating % % % % Proportion of fixed versus floating rate debt at 31 March 54 46 54 46 5.2.4 Equity price risk Equity price risk arises from investments listed on the Johannesburg Stock Exchange. Changes in the fair value of equity securities held by the group will fluctuate because of changes in market prices caused by factors specific to the individual equity issuer or factors affecting all similar equity securities traded on the market. The investment policy is approved by the Escap board and monitored by the Escap audit and risk committees. Exposure to market risk is limited through diversification and by applying strict investment criteria. Carrying values of investments per sector Group 2025 2024 portfolio portfolio Rm % Rm % Banks, financial services and insurance 729 39 562 36 Basic materials and resources 360 19 297 19 Consumer goods and services 550 29 559 36 Other 230 13 132 9 1 869 100 1 550 100 A 1% increase or decrease in share prices would have increased/decreased profit or loss before tax by R19 million (2024: R16 million). ABC 75 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.3 Liquidity risk Liquidity risk can arise from mismatches in the timing of cash flows from revenue with capital and operational outflows. Funding risk arises when the necessary liquidity to fund illiquid asset positions, such as building new electricity capacity, cannot be obtained at the expected terms and when required. The objective of the group’s liquidity and funding management is to ensure that all foreseeable operational and capital expenditure as well as debt commitments can be met under both normal and stressed conditions. The group has adopted an overall statement of financial position approach, which consolidates all sources and uses of liquidity, while aiming to maintain a balance between liquidity, profitability and interest rate considerations. The management of group liquidity and funding risk is centralised in the treasury department in accordance with practices and limits set by Exco and the board. The group’s liquidity and funding management process includes: • projecting cash flows and considering the cash required by the group and optimising the short-term liquidity as well as the long-term funding • managing the concentration and profile of debt maturities • maintaining liquidity and funding contingency plans The group has an established corporate governance structure and process for managing the risks regarding guarantees and contingent liabilities. All significant guarantees issued by the group are approved by the board and are managed on an ongoing basis by the treasury department and by Exco. The audit committee assists the board by providing oversight over financial reporting risks and the risk committee provides oversight over the enterprise risk management framework. Refer to note 45. 5.3.1 Key liquidity indicators Group Company Unit 2025 2024 2025 2024 Weighted average term to maturity of debt securities and borrowings years 5.78 6.07 5.78 6.08 Working capital ratio 1.04 0.98 1.07 1.12 Cash interest cover ratio 2.76 1.18 1.96 1.19 Net debt service cover ratio 1.11 0.46 0.78 0.46 Liquid assets Rm 63 761 23 585 62 757 22 965 The cash interest cover and debt service cover ratios measure the ability to fund debt costs via cash from operations. Management has targeted 3.5 for cash interest cover and 1.5 for net debt service cover. Liquid assets are investments identified as having the potential to be quickly converted into cash and consist of cash and cash equivalents. 5.3.2 Primary sources of funding and unused facilities The primary sources to meet the group’s liquidity requirements are cash generated from operations, cash inflows from maturing financial assets, funds committed by government through the Debt Relief Act, 7 of 2023, as well as signed development finance institution facilities. No new borrowings are allowed during the period of the debt relief, unless approved by the Minister of Finance. Eskom is allowed to drawdown on existing facilities that were in place at 31 March 2023. All figures are quoted in notional amounts. Group and company ZAR EUR USD 2025 2024 2025 2024 2025 2024 m m m m m m Facilities available Development financing institutions 1 118 2 035 60 – 632 1 065 World Bank – – – – 438 439 African Development Bank 1 118 2 035 60 – 2 4 Clean technology fund – African Development Bank – – – – 21 36 Clean technology fund – World Bank – – – – 47 48 New Development Bank – – – – 44 60 Kreditanstalt für Wiederaufbau – – – – 80 91 China Development Bank – – – – – 387 Export credit agencies Kreditanstalt für Wiederaufbau – Hermes1 – – 12 12 – – 1 118 2 035 72 12 632 1 065 Facilities available (rand equivalent) 1 118 2 035 1 426 246 11 572 20 214 The facility agreement with African Development Bank was amended in November 2024 to reallocate the unused amount of EUR60 million to funding for the construction of transmission lines to enhance renewable energy integration into the grid. The China Development Bank facility was amended before the expiry of the availability period on 31 December 2024 to allow for the undrawn balance of USD387 million to be converted to Chinese yuan. ABC 76 Group and company ZAR EUR USD 2025 2024 2025 2024 2025 2024 m m m m m m Funds received during the year Development financing institutions 917 895 – – 433 351 World Bank 2 – – – – 1 1 African Development Bank 3 917 60 – – 2 21 Clean technology fund – World Bank4 – – – – 1 135 Clean technology fund – African Development Bank4 – – – – 15 22 New Development Bank 5 – – – – 16 18 Kreditanstalt für Wiederaufbau6 – – – – 11 4 Agence Française de Développement7 – 835 – – – – China Development Bank8 – – – – 387 150 917 895 – – 433 351 Funds received during the year (rand equivalent) 917 895 – – 7 928 6 662 Government guarantees Group and company 2025 2024 Domestic General Total Domestic General Total multi-term multi-term note note programme programme Rm Rm Rm Rm Rm Rm Opening balance – 2 191 2 191 6 232 2 191 8 423 Guarantee granted 145 768 183 000 328 768 152 000 198 000 350 000 Accumulated amounts used (145 768) (180 809) (326 577) (145 768) (195 809) (341 577) Facilities repaid – – – – 15 000 15 000 Reduction in facility granted due to debt relief – – – (6 232) (15 000) (21 232) Closing balance – 2 191 2 191 – 2 191 2 191 Guarantee granted 145 768 183 000 328 768 145 768 183 000 328 768 Accumulated amounts used (145 768) (180 809) (326 577) (145 768) (180 809) (326 577) The availability of the unused portion of the government guarantee facility of R350 billion expired on 31 March 2023. Capital repayments on existing government guaranteed debt facilities amounted to R10.9 billion (2024: R25.4 billion). Loan covenants There are various loan covenants, both of a financial and non-financial nature, attached to the loan facilities. The covenants are closely monitored on an ongoing basis for compliance. The group proactively notifies and engages with lenders should an event of default be anticipated to remedy the possible event before a default is triggered including obtaining an extension of a submission deadline or a waiver for a potential breach. The right to defer settlement in certain of the loan agreements is subject to assessing compliance to the loan covenants after the reporting date. These include: • submission of annual and interim financial statements within specified timelines • unqualified audit opinion on the financial statements and no reportable irregularities • environmental compliance The covenants in the loan facilities of the group generally fall into the following categories: • Events of default There are various events, both of a financial and non-financial nature, that can trigger a default. Eskom has to on occurrence of these events, without delay, notify the relevant lenders. If an event is not cured or remedied within specified periods, it could trigger acceleration of outstanding amounts (immediately due and payable upon notice) and cancellation of undisbursed funds. Acceleration could lead to events of default and recalling of government guarantees. Cross default to other loans may be triggered in most instances. 1. An extension was requested for the availability period of the existing facility. 2. Funds received were for the Komati project. 3. Funds received were for transmission projects. 4. Funds received were for the battery energy storage system project. 5. Funds received were for the renewable energy integration and transmission augmentation project. 6. Funds received were for the renewable grid integration and strengthening programme. 7. Funds received were for phase 2 of the Namaqualand strengthening project. 8. Funds received were for the Kusile power station. ABC 77 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 5. Financial risk management (continued) 5.3 Liquidity risk (continued) 5.3.2 Primary sources of funding and unused facilities (continued) Loan covenants (continued) • Events of default (continued) Potential events of default and mitigating measures include: – Maintain financial ratios: Key lenders require that certain financial ratios be maintained at specified levels (debt service cover ratio between 0.9 to 1.3 and a minimum EBITDA margin of 25%). Potential non-compliance is mitigated through financial action plans as detailed in the loan agreements. These include sharing of relevant financial information with lenders, such as the performance on financial measures quarterly and the Eskom Corporate Plan annually, as well as submission of annual compliance certificates. The required extensions to submit the financial action plan and supporting documentation which includes the rationale for the non-compliance and provides insight into steps that Eskom can take to improve performance were obtained for the year. There was no event of default despite Eskom not meeting the minimum financial ratios as threshold alone does not trigger an event of default. – Annual and interim financial statements submitted within specified timelines: Certain loan agreements require Eskom to submit financial statements within specified timelines after the reporting date. There could be a potential breach if a delay in the submission is not rectified within the timelines specified in the loan agreements. All potential events of default were proactively managed. Eskom engaged on a continuous basis at the highest level of governance to obtain extensions and waivers where potential delays were expected to avoid any event of default. Extension letters were received from all lenders that cover the period up to the date of issuing the financial statements to ensure compliance with the required timelines. – Unqualified audit opinion of the financial statements and no reportable irregularities: Eskom has one loan agreement where a default event could be triggered with the issue of a qualified audit opinion due to PFMA non-compliance or raising of a reportable irregularity resulting in a potential breach if the relevant waiver is not obtained timeously. Eskom engaged proactively with the lender regarding the details and potential impact of a qualified audit opinion and reportable irregularities prior to the release of the financial statements. The relevant waivers valid up to the date of approval of the financial statements were obtained in October 2024 to cover potential events of default arising from the audit qualification and reportable irregularities in the 31 March 2024 annual financial statements. The potential default was therefore successfully remedied. The risk of a continued audit qualification and reportable irregularities relating to the 31 March 2025 annual financial statements could only be confirmed upon the conclusion of the audit. Eskom had a reasonable expectation at the reporting date that the relevant waivers will be obtained. The relevant waivers applicable to 31 March 2025 have subsequently been obtained after following a similar process of proactive engagement to cover potential events of default including those arising from PFMA non-compliance and reportable irregularities, up to the date of issuing the financial statements. – Information submitted within specified timelines: Information covenants include submission of project progress reports, compliance certificates and environmental reports. Any anticipated delays in submitting the required information are communicated upfront to lenders. The financial position, operational performance, progress of the legal separation and PFMA compliance of the group were discussed during the quarterly engagements with lenders. • Prepayment events Certain events could trigger the prepayment of outstanding loan balances prior to the original maturity date, usually within 30 days of notice. Potential prepayment events and mitigating measures include: – Environmental compliance: Certain obligations in the loan agreements could have been breached with emissions above allowed limits when the three units at Kusile power station were damaged on 22 October 2022 after the flue-gas duct failure at unit 1 became operational in November 2023 without using the flue-gas desulphurisation plant. Eskom obtained approval from the DFFE as a mitigation measure to operate the temporary stacks and postpone compliance with emission standards. Eskom engaged with the three impacted lenders in advance regarding the mitigation measures to prevent any potential breach of loan conditions as Eskom did not exceed any emission standards and is complying with all obligations under the loan agreements. An independent environmental consultant was appointed as requested by two of the lenders to conduct an environmental and social review of the impact of the temporary stacks and to review the mitigation measures. Eskom is committed to address the concerns and implement the recommendations raised by the environmental consultant in their close-out report. The lenders are satisfied with the progress made to date and Eskom continues to maintain active engagement with lenders to ensure ongoing compliance with environmental covenants and to address any risk of potential default. – Legal separation of Eskom divisions: The legal separation process requires advance approval from lenders. Ongoing engagement is taking place with lenders regarding the future legal separation of the distribution and generation divisions. • Suspension and cancellation events Certain events such as audit qualifications, procurement irregularities or funds not used in line with the loan conditions could trigger suspension and/or cancellation of undisbursed amounts if the event that has triggered the suspension is not cured or remedied within a specified period (usually 60 days). Eskom proactively engaged with lenders to ensure that all possible suspension and/or cancellation events are remedied in time. Independent external reviews were performed on certain facilities to ensure funds were utilised in compliance with the loan conditions and disbursements were received on these facilities. No suspensions or cancellations were triggered during the year. • Representation and warranties Eskom made certain representations regarding its status and the information provided to lenders by signing the loan agreements. Making false and/or misleading representation and warranties is an event of default under all the agreements. Eskom maintained full compliance with these obligations, thereby avoiding any default events related to misrepresentations. All possible events and covenant breaches have been successfully remedied or waived before default and there were no loan defaults or covenant breaches at the reporting date and up to the date of approval of the financial statements. There were also no breaches that resulted in the early repayment of a facility at the reporting date. 5.3.3 Contractual cash flows The contractual undiscounted cash flows of the group’s financial assets and liabilities are indicated on the basis of their earliest possible contractual maturity. The cash flows for derivatives held for risk management are presented on a net basis in line with the classification in the statement of financial position. Contractual cash flows are a function of forward exchange rates and forward interest rates and are a point-in-time calculation that are impacted by market conditions at that time. Only cash flows relating to financial instruments and financial guarantees have been presented and do not include future cash flows expected from the normal course of business and related commodity-linked pricing agreements. ABC 78 Cash flows Nominal 0–3 months 4–12 months 1–5 years >5 years inflow/outflow Rm Rm Rm Rm Rm 2025 Group Financial assets Loans receivable 3 344 47 831 2 466 – Derivatives held for risk management 21 166 221 433 17 751 2 761 Finance lease receivables 234 6 49 153 26 Trade and other receivables 45 660 43 373 1 747 540 – Treasury investments 3 736 – – 3 736 – Insurance investments 24 043 7 231 12 700 4 112 – Cash and cash equivalents 63 761 63 761 – – – 161 944 114 639 15 760 28 758 2 787 Financial liabilities Debt securities and borrowings 606 739 7 183 31 260 245 374 322 9221 Derivatives held for risk management 2 257 850 2 692 1 120 (2 405) Lease liabilities 11 393 750 1 393 7 374 1 876 Trade and other payables 51 762 42 985 8 486 289 2 672 151 51 768 43 831 254 157 322 395 Company Financial assets Loans receivable 61 227 6 139 5 019 29 995 20 074 Derivatives held for risk management 21 219 234 473 17 751 2 761 Finance lease receivables 131 – 14 94 23 Trade and other receivables 63 832 61 614 1 188 1 030 – Treasury investments 3 736 – – 3 736 – Cash and cash equivalents 62 757 62 757 – – – 212 902 130 744 6 694 52 606 22 858 Financial liabilities Debt securities and borrowings 633 211 28 249 31 434 250 606 323 9221 Derivatives held for risk management 2 275 858 2 702 1 120 (2 405) Lease liabilities 1 658 98 162 792 606 Trade and other payables 66 871 58 258 8 353 258 2 Financial guarantees 191 191 – – – 704 206 87 654 42 651 252 776 321 125 2024 Group Financial assets Loans receivable 19 037 283 841 4 273 13 640 Derivatives held for risk management 40 116 325 7 698 19 926 12 167 Finance lease receivables 295 16 45 186 48 Trade and other receivables 42 789 40 652 1 607 530 – Treasury investments 1 559 – – 1 559 – Insurance investments 19 702 8 634 8 463 2 605 – Cash and cash equivalents 23 585 23 585 – – – 147 083 73 495 18 654 29 079 25 855 Financial liabilities Debt securities and borrowings 710 255 8 528 67 372 273 137 361 2181 Derivatives held for risk management 2 646 496 2 150 – – Lease liabilities 11 544 441 1 309 8 488 1 306 Trade and other payables 47 941 39 717 7 926 298 – 772 386 49 182 78 757 281 923 362 524 Company Financial assets Loans receivable 63 305 819 4 941 34 495 23 050 Derivatives held for risk management 40 129 338 7 698 19 926 12 167 Finance lease receivables 184 8 27 107 42 Trade and other receivables 42 026 39 320 1 899 807 – Treasury investments 1 559 – – 1 559 – Cash and cash equivalents 22 965 22 965 – – – 170 168 63 450 14 565 56 894 35 259 Financial liabilities Debt securities and borrowings 718 992 12 413 67 406 278 047 361 1261 Derivatives held for risk management 2 646 496 2 150 – – Lease liabilities 467 31 77 324 35 Trade and other payables 39 727 31 717 7 822 188 – Financial guarantees 206 206 – – – 762 038 44 863 77 455 278 559 361 161 1. The maturity profile of undiscounted contractual payments of debt securities and borrowings due after five years comprise of: – between years five and 10: group R137 946 million (2024: R202 813 million) and company R137 946 million (2024: R202 721 million) – beyond 10 years: group R184 976 million (2024: R158 405 million) and company R184 976 million (2024: R158 405 million) ABC 79 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 6. Accounting classification and fair value 6.1 Accounting classification 2025 2024 Fair value Amortised Other1 Total Fair value Amortised Other1 Total through cost through cost profit profit or loss or loss Note Rm Rm Rm Rm Rm Rm Rm Rm Group Financial assets Loans receivable 15 – 1 892 – 1 892 – 7 773 – 7 773 Home loans – – – – – 7 392 – 7 392 Municipal payment arrangement – 1 864 – 1 864 – – – – Other loans – 28 – 28 – 381 – 381 Embedded derivatives 16 3 972 – – 3 972 11 801 – – 11 801 Derivatives held for risk management 17 3 785 – 11 560 15 345 5 574 – 21 442 27 016 Foreign exchange contracts 264 – 34 298 209 – 56 265 Cross-currency swaps 2 872 – 11 526 14 398 4 819 – 21 386 26 205 Commodity forwards 3 – – 3 210 – – 210 Commodity options 23 – – 23 7 – – 7 Inflation-linked swaps 623 – – 623 329 – – 329 Finance lease receivables 18 – – 174 174 – – 211 211 Trade and other receivables 20 – 37 189 – 37 189 – 35 436 – 35 436 Treasury investments 21 – 2 638 – 2 638 – 1 024 – 1 024 Insurance investments 21 1 869 20 449 – 22 318 1 550 16 952 – 18 502 Negotiable certificates of deposit – 17 056 – 17 056 – 13 900 – 13 900 Floating rate notes – 2 886 – 2 886 – 2 024 – 2 024 Inflation-linked bonds – 507 – 507 – 1 028 – 1 028 Listed shares 1 869 – – 1 869 1 550 – – 1 550 Cash and cash equivalents 22 – 63 761 – 63 761 – 23 585 – 23 585 Bank balances – 31 684 – 31 684 – 10 865 – 10 865 Fixed deposits – 32 077 – 32 077 – 12 720 – 12 720 9 626 125 929 11 734 147 289 18 925 84 770 21 653 125 348 Financial liabilities Debt securities and borrowings 25 – 372 655 – 372 655 – 412 200 – 412 200 Eskom bonds – 169 992 – 169 992 – 165 809 – 165 809 Commercial paper – – – – – 748 – 748 Eurorand zero coupon bonds – 9 077 – 9 077 – 8 045 – 8 045 Foreign bonds – 39 419 – 39 419 – 64 551 – 64 551 Development financing institutions – 133 562 – 133 562 – 139 270 – 139 270 Export credit facilities – 20 063 – 20 063 – 25 583 – 25 583 Other loans – 542 – 542 – 8 194 – 8 194 Derivatives held for risk management 17 1 252 – 395 1 647 358 – 235 593 Foreign exchange contracts 347 – 77 424 318 – 45 363 Cross-currency swaps 802 – 318 1 120 12 – 190 202 Commodity forwards 80 – – 80 – – – – Commodity options 6 – – 6 – – – – Credit default swaps 17 – – 17 27 – – 27 Inflation-linked swaps – – – – 1 – – 1 Lease liabilities 29 – – 7 710 7 710 – – 7 403 7 403 Trade and other payables 30 – 51 734 – 51 734 – 47 912 – 47 912 1 252 424 389 8 105 433 746 358 460 112 7 638 468 108 1. Other includes derivatives held for risk management designated as cash flow hedges measured at fair value through other comprehensive income and finance leases in terms of IFRS 16 Leases measured at amortised cost. The total assets measured at amortised cost amounted to R126 103 million (2024: R84 981 million) and the total liabilities measured at amortised cost amounted to R432 099 million (2024: R467 515 million). ABC 80 2025 2024 Fair value Amortised Other1 Total Fair value Amortised Other Total through cost through cost assets and profit profit liabilities1 or loss or loss Note Rm Rm Rm Rm Rm Rm Rm Rm Company Financial assets Loans receivable 15 – 39 401 – 39 401 – 39 425 – 39 425 Loans to subsidiaries – 37 537 – 37 537 – 39 425 – 39 425 Municipal payment arrangement – 1 864 – 1 864 – – – – Embedded derivatives 16 3 972 – – 3 972 11 801 – – 11 801 Derivatives held for risk management 17 3 835 – 11 560 15 395 5 601 – 21 442 27 043 Foreign exchange contracts 314 – 34 348 236 – 56 292 Cross-currency swaps 2 872 – 11 526 14 398 4 819 – 21 386 26 205 Commodity forwards 3 – – 3 210 – – 210 Commodity options 23 – – 23 7 – – 7 Inflation-linked swaps 623 – – 623 329 – – 329 Finance lease receivables 18 – – 92 92 – – 131 131 Trade and other receivables 20 – 55 929 – 55 929 – 35 509 – 35 509 Treasury investments 21 – 2 638 – 2 638 – 1 024 – 1 024 Cash and cash equivalents 22 – 62 757 – 62 757 – 22 965 – 22 965 Bank balances – 30 680 – 30 680 – 10 245 – 10 245 Fixed deposits – 32 077 – 32 077 – 12 720 – 12 720 7 807 160 725 11 652 180 184 17 402 98 923 21 573 137 898 Financial liabilities Debt securities and borrowings 25 – 398 674 – 398 674 – 420 285 – 420 285 Eskom bonds – 175 167 – 175 167 – 170 931 – 170 931 Eurorand zero coupon bonds – 9 077 – 9 077 – 8 045 – 8 045 Foreign bonds – 39 419 – 39 419 – 64 551 – 64 551 Development financing institutions – 133 562 – 133 562 – 139 270 – 139 270 Export credit facilities – 20 063 – 20 063 – 25 583 – 25 583 Other loans – 21 386 – 21 386 – 11 905 – 11 905 Derivatives held for risk management 17 1 270 – 395 1 665 358 – 235 593 Foreign exchange contracts 365 – 77 442 318 – 45 363 Cross-currency swaps 802 – 318 1 120 12 – 190 202 Commodity forwards 80 – – 80 – – – – Commodity options 6 – – 6 – – – – Credit default swaps 17 – – 17 27 – – 27 Inflation-linked swaps – – – – 1 – – 1 Lease liabilities 29 – – 1 111 1 111 – – 313 313 Trade and other payables 30 – 66 849 – 66 849 – 39 703 – 39 703 1 270 465 523 1 506 468 299 358 459 988 548 460 894 6.2 Fair value Valuation processes The group has a control framework in place for the measurement of fair values. It includes a valuation team (supported by external specialists) that ultimately reports to the chief financial officer and has overall responsibility for all significant fair value measurements. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. Where third-party information, such as broker quotes or pricing services, is used to measure fair value, this information is assessed as to whether it provides adequate support for the accounting treatment applied including the level of the fair value hierarchy assigned to it. Principal markets The group is involved in various principal markets because of the unique funding activities undertaken where the fair value is determined by each participant in the different principal markets. The principal markets include: • capital and money markets • development financing institutions • export credit agencies 1. Other includes derivatives held for risk management designated as cash flow hedges measured at fair value through other comprehensive income and finance leases in terms of IFRS 16 measured at amortised cost. The total assets measured at amortised cost amounted to R160 817 million (2024: R99 054 million) and the total liabilities measured at amortised cost amounted to R466 634 million (2024: R460 301 million). ABC 81 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 6. Accounting classification and fair value (continued) 6.2 Fair value (continued) Fair value hierarchy Fair value measurements are categorised into the different levels in the fair value hierarchy based on the inputs to the valuation techniques used. There were no changes in the valuation techniques applied. The hierarchy levels are defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within level 1 that are observable, either directly (ie as prices) or indirectly (ie derived from prices). Level 3: Unobservable inputs. There were no transfers between levels 1, 2 or 3 of the fair value hierarchy during the year. The group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfers have occurred. The group’s policy for determining when transfers between levels in the hierarchy have occurred includes monitoring of the following factors: • changes in market and trading activity (eg significant increases/decreases in activity) • changes in inputs used in valuation techniques (eg inputs becoming/ceasing to be observable in the market) Valuation techniques Financial instrument Valuation technique Level 1: Quoted prices (unadjusted) in active markets Insurance investments (listed shares) Quoted bid price in active markets. A market is regarded as active when it is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Inputs other than quoted prices included within level 1 that are observable Loans receivable (excluding EFC), treasury A discounted cash flow technique is used which uses expected cash flows and a market related investments, insurance investments (excluding discount rate. listed shares) and debt securities and borrowings Derivatives held for risk management Valuation determined with reference to broker quotes as well as use of discounted cash flow and option pricing models. Broker quotes are tested for reasonableness by discounting expected future cash flows using a market interest rate for a similar instrument at the measurement date. Valuations of cross-currency swaps include the credit risk of Eskom (known as debit value adjustment) and counterparties (known as credit value adjustment) where appropriate. A stochastic modelling approach is followed where the expected future exposure to credit risk for Eskom and its counterparties (considering default probabilities and recovery rates derived from market data) is modelled. Trade and other payables and cash and cash Fair values have not been disclosed for financial instruments where the carrying amounts are a equivalents reasonable approximation of fair value. Level 3: Unobservable inputs Embedded derivatives Fair value determined using unobservable inputs. Refer to note 16 for a movement reconciliation and to note 4.1 for information regarding the valuation techniques and assumptions used. Loans receivable (EFC home and other loans) The fair value of EFC loans are based on discounted cash flows using market related interest rates. Trade and other receivables Fair value determined using unobservable inputs. The carrying value is equal to the fair value due to the expected short-term maturity of the trade receivables. The fair value for long-term receivables is based on discounted cash flows using the effective interest rate method. The carrying value approximates the fair value as the interest rates are market related and no additional disclosure is required. ABC 82 The fair value hierarchy of financial instruments is as follows: 2025 2024 Measured Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 at fair value Rm Rm Rm Rm Rm Rm Group Financial assets Loans receivable – 1 893 – – 415 6 646 Home loans No – – – – – 6 646 Municipal payment arrangement No – 1 864 – – – – Other loans No – 29 – – 415 – Embedded derivatives Yes – – 3 972 – – 11 801 Derivatives held for risk management – 15 345 – – 27 016 – Foreign exchange contracts Yes – 298 – – 265 – Cross-currency swaps Yes – 14 398 – – 26 205 – Commodity forwards Yes – 3 – – 210 – Commodity options Yes – 23 – – 7 – Inflation-linked swaps Yes – 623 – – 329 – Treasury investments No – 2 646 – – 1 039 – Insurance investments 1 869 20 567 – 1 550 17 090 – Negotiable certificates of deposit No – 17 153 – – 13 925 – Floating rate notes No – 2 901 – – 2 112 – Inflation-linked bonds No – 513 – – 1 053 – Listed shares Yes 1 869 – – 1 550 – – Assets held-for-sale – – 7 233 – – – Home loans No – – 6 725 – – – Other loans No – – 508 – – – Financial liabilities Debt securities and borrowings – 358 836 – – 385 808 – Eskom bonds No – 154 673 – – 144 176 – Commercial paper No – – – – 748 – Eurorand zero coupon bonds No – 7 788 – – 6 348 – Foreign bonds No – 42 751 – – 63 953 – Development financing institutions No – 131 570 – – 134 585 – Export credit facilities No – 21 477 – – 27 622 – Other loans No – 577 – – 8 376 – Derivatives held for risk management – 1 647 – – 593 – Foreign exchange contracts Yes – 424 – – 363 – Cross-currency swaps Yes – 1 120 – – 202 – Commodity forwards Yes – 80 – – – – Commodity options Yes – 6 – – – – Credit default swaps Yes – 17 – – 27 – Inflation-linked swaps Yes – – – – 1 – ABC 83 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 6. Accounting classification and fair value (continued) 6.2 Fair value (continued) Fair value hierarchy (continued) 2025 2024 Measured Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 at fair value Rm Rm Rm Rm Rm Rm Company Financial assets Loans receivable – 39 064 – – 38 803 – Loans to subsidiaries1 No – 37 200 – – 38 803 – Municipal payment arrangement No – 1 864 – – – – Embedded derivatives Yes – – 3 972 – – 11 801 Derivatives held for risk management – 15 395 – – 27 043 – Foreign exchange contracts Yes – 348 – – 292 – Cross-currency swaps Yes – 14 398 – – 26 205 – Commodity forwards Yes – 3 – – 210 – Commodity options Yes – 23 – – 7 – Inflation-linked swaps Yes – 623 – – 329 – Treasury investments No – 2 646 – – 1 039 – Financial liabilities Debt securities and borrowings – 384 839 – – 393 783 – Eskom bonds No – 159 831 – – 149 189 – Eurorand zero coupon bonds No – 7 788 – – 6 348 – Foreign bonds No – 42 751 – – 63 953 – Development financing institutions No – 131 570 – – 134 585 – Export credit facilities No – 21 477 – – 27 622 – Other loans No – 21 422 – – 12 086 – Derivatives held for risk management – 1 665 – – 593 – Foreign exchange contracts Yes – 442 – – 363 – Cross-currency swaps Yes – 1 120 – – 202 – Commodity forwards Yes – 80 – – – – Commodity options Yes – 6 – – – – Credit default swaps Yes – 17 – – 27 – Inflation-linked swaps Yes – – – – 1 – 1. The values are based on the assumption that there are no changes in the manner of recovery of the loans. It is assumed that the outstanding amount on the loan to: – EFC would be recovered based on the collections from the underlying loans and advances in EFC in the normal course of business, it is however expected that the loan will be settled in 2026 from the proceeds of the sale of the EFC disposal group. Refer to note 23. – ERI would be recovered through refinancing or repayment of the loan by 26 March 2027. – NTCSA would be recovered through the underlying cost of servicing the debt incurred to fund NTCSA in the normal course of business. ABC 84 7. Segment information The operations of the group consist mainly of generation, distribution and transmission activities through Eskom and NTCSA. Operating segments Management identified the reportable segments based on the reports regularly provided, reviewed and used by Exco which serves as the Chief Operating Decision Maker. Exco makes strategic decisions and assessed the performance of the operating segments based on a measure of profit or loss, significant assets and liabilities as well as key financial ratios and operational performance indicators. The amounts provided to Exco in respect of total assets and liabilities were measured in terms of IFRS Accounting Standards. These assets and liabilities were allocated based on the operation of the segment. The operations of the reportable segments are as follows: Segment Operations Generation Consists of generation, primary energy and group capital functions that respectively: • procure primary energy • manage capacity and generates electricity for sale to transmission • plan, develop, execute and monitor generation-related capital projects Transmission (NTCSA) Consists of transmission network, international customers and electricity trading functions that respectively: • operates and maintains the transmission network for transmitting electricity through the transmission network and manages real time supply and demand by the system operator • purchase and sale bulk electricity with international customers through the international trader • operates the electricity trading system through the transmission central purchasing agent including purchase of electricity from generation and IPPs and sale of electricity to distribution across six transmission grids Distribution Consists of five operating clusters across nine provinces who provides, operates and maintains the distribution network for distributing electricity and the sale of electricity to local large (including municipalities) and small power users (including prepaid residential customers). All other segments Relates to operating segments which are below the quantitative thresholds for determining a reportable segment in terms of IFRS 8 Operating Segments which includes the group’s subsidiaries as well as all service and strategic functions (corporate entities) which do not qualify as a reportable segment in terms of IFRS 8. Electricity is sold by distribution to external customers in terms of contractual agreements based on the NERSA approved regulated tariffs and accounted for as external revenue in terms of the principal revenue generating activities of the group referred to in note 2.19. Electricity is also sold to international customers through the international trader and accounted for as external revenue in terms of the principal revenue generating activities of the group. Inter-segment transactions Inter-segment transactions are based on contractual agreements between segments, including between the generation, transmission and distribution segments for the sale and purchase of electricity. Energy related sales and recoveries Inter-segment energy related revenue and recoveries (achieved through transfer pricing) for the flow of electricity from generator to consumer are derived from the revenue in the approved corporate plan which is based on cost recovery plus a return on assets informed by the regulatory methodology principles and revenue determinations, and adjusted in line with regulatory records of decision, RCA and court decisions. Transfer pricing between the segments is adjusted in future periods as a recovery or reduction to account for differences between actual and estimated information. The services and related charges between segments for the sale and purchase of electricity are as follows: Generation Electricity generated is sold to transmission based on a tariff (reflective of the generating costs) consisting of a fixed capacity and a variable energy component as well as a charge for ancillary services to assist the transmission system operator to maintain grid stability in line with the Grid Code. The charges are recognised as follows: • fixed capacity charge over time as capacity is made available to the customer • variable energy charge at a point in time as electricity is delivered and consumed Transmission (NTCSA) The Grid Code sets out the objectives of transmission pricing and the allocation of costs between generators and load customers, including charges for network related services. Transmission incurs additional energy costs (energy purchases from IPPs and import of energy). Electricity is sold to distribution at a tariff that allows the recovery of costs and return on assets consisting of a fixed capacity and a variable energy component where the ratio between fixed and variable costs is aligned with the regulated tariffs charged to external customers. Transmission also charges generation and distribution their portion of transmission network and related costs (equal recovery of network losses, network access charges and ancillary services from generators and load customers recovered via distribution from external customers). The charges are recognised as follows: • network charges over time for services • fixed capacity charge over time as capacity is made available to the customer • variable energy charge at a point in time as electricity is delivered and consumed Distribution Distribution procures electricity from the transmission central purchasing agent (fixed capacity and variable energy charge) and incurs transmission network operator services (network losses, network access and ancillary (reliability) charges). ABC 85 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 7. Segment information (continued) Inter-segment transactions (continued) Other All direct corporate service costs were charged to the relevant segments based on service consumption. An appropriate cost driver apportionment was used to split the remaining overhead costs on a fair basis between segments. Net finance costs, net fair value and foreign exchange gains/(losses) were allocated to segments based on segment funding requirements. The segment information provided to Exco for the reportable segments is as follows: Generation Transmission Distribution All other Reallocation Group segments and inter- segment transactions Rm Rm Rm Rm Rm Rm 2025 External revenue – 21 202 319 701 1 408 (1 416) 340 895 Inter-segment revenue/recoveries 207 117 73 687 (280 788) 16 860 (16 876) – Total revenue 207 117 94 889 38 913 18 268 (18 292) 340 895 Other income 738 675 2 371 2 326 (2 845) 3 265 Primary energy (98 008) (52 185) (14) – – (150 207) Employee benefit expense (16 631) (4 530) (14 359) (7 640) – (43 160) (Impairment)/reversal of impairment of financial assets (284) (527) (7 330) (8) 832 (7 317) Reversal of impairment/(impairment) and write down of other assets 174 (4) (468) (180) 179 (299) Other expenses (38 295) (1 421) (12 276) (12 193) 20 046 (44 139) Profit/(loss) before depreciation and amortisation expense and net fair value and foreign exchange (loss)/gain (EBITDA) 54 811 36 897 6 837 580 (87) 99 038 Depreciation and amortisation expense (24 564) (2 629) (4 421) (377) 227 (31 764) Net fair value and foreign exchange (loss)/gain (2 945) (175) (6 176) (1 116) (3) (10 415) Profit/(loss) before net finance (cost)/income and share of profit of equity-accounted investees 27 302 34 093 (3 760) (913) 137 56 859 Net finance (cost)/income (31 930) (1 121) (1 511) 1 316 154 (33 092) Finance income 122 1 706 1 553 8 760 (5 301) 6 840 Finance cost (32 052) (2 827) (3 064) (7 444) 5 455 (39 932) Share of profit of equity-accounted investees after tax – – – 102 – 102 (Loss)/profit before tax (4 628) 32 972 (5 271) 505 291 23 869 Income tax – (5 761) – (1 363) (698) (7 822) (Loss)/profit for the year (4 628) 27 211 (5 271) (858) (407) 16 047 Other information Segment assets 583 251 137 871 143 596 188 111 (149 155) 903 674 Investment in equity-accounted investees – – – 346 – 346 Assets held-for-sale – – – 7 811 – 7 811 Total assets 583 251 137 871 143 596 196 268 (149 155) 911 831 Total liabilities 90 195 94 617 89 135 493 242 1 (133 703) 633 486 Additions and transfers to property, plant and equipment and intangible assets 27 156 6 357 6 908 1 107 (114) 41 414 1. Represents the external debt and borrowings that are accounted for in the treasury segment. ABC 86 Generation Transmission Distribution All other Reallocation Group segments and inter- segment transactions Rm Rm Rm Rm Rm Rm 2024 External revenue – 11 054 284 760 1 085 (1 085) 295 814 Inter-segment revenue/recoveries 190 236 64 160 (254 358) 15 818 (15 856) – Total revenue 190 236 75 214 30 402 16 903 (16 941) 295 814 Other income 597 1 186 290 2 277 (3 055) 1 295 Primary energy (117 873) (55 842) (14) – – (173 729) Employee benefit expense (13 332) (3 283) (12 407) (6 074) – (35 096) Reversal of impairment/(impairment) of financial assets 17 (450) (2 216) (500) 132 (3 017) Reversal of impairment/(impairment) and write down of other assets 309 (2) (720) (3) – (416) Other expenses (36 722) (2 364) (10 148) (10 667) 18 460 (41 441) Profit/(loss) before depreciation and amortisation expense and net fair value and foreign exchange gain/(loss) (EBITDA) 23 232 14 459 5 187 1 936 (1 404) 43 410 Depreciation and amortisation expense (26 186) (2 565) (4 365) (339) 216 (33 239) Net fair value and foreign exchange gain/(loss) 522 (70) 2 166 26 – 2 644 (Loss)/profit before net finance (cost)/income and share of profit of equity-accounted investees (2 432) 11 824 2 988 1 623 (1 188) 12 815 Net finance (cost)/income (33 582) (4 861) (2 024) 1 909 169 (38 389) Finance income 222 105 1 141 3 603 (212) 4 859 Finance cost (33 804) (4 966) (3 165) (1 694) 381 (43 248) Share of profit of equity-accounted investees after tax – – – 105 – 105 (Loss)/profit before tax (36 014) 6 963 964 3 637 (1 019) (25 469) Income tax – – – (29 793) 247 (29 546) (Loss)/profit for the year (36 014) 6 963 964 (26 156) (772) (55 015) Other information Segment assets 561 658 85 157 143 681 163 683 (88 203) 865 976 Investment in equity-accounted investees – – – 346 – 346 Total assets 561 658 85 157 143 681 164 029 (88 203) 866 322 Total liabilities 94 159 32 287 65 175 518 9641 (67 121) 643 464 Additions and transfers to property, plant and equipment and intangible assets 28 686 5 414 8 486 591 (233) 42 944 Group Revenue Non-current assets 2025 2024 2025 2024 Geographical information Rm Rm Rm Rm South Africa 319 285 284 357 699 270 693 309 Foreign countries 21 610 11 457 – – 340 895 295 814 699 270 693 309 The group’s reportable segments operate mainly in South Africa, which is Eskom’s country of domicile. Revenue is allocated based on the country in which the customer is located after eliminating inter-segment transactions. There is no significant revenue derived from a single external customer by any of the reportable segments. Non-current assets disclosed for geographical information comprise non-current assets other than deferred tax assets and financial instruments. 1. Represents the external debt and borrowings that are accounted for in the treasury segment. ABC 87 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 8. Property, plant and equipment Land, Plant Equipment Assets Total buildings Generating Transmitting Distributing Spares and under and and vehicles construction facilities other Note Rm Rm Rm Rm Rm Rm Rm Rm 2025 Group Carrying value at beginning of the year 8 684 375 081 50 619 77 550 18 262 4 385 146 369 680 950 Cost 11 897 568 199 78 705 149 415 20 162 18 273 146 369 993 020 Accumulated depreciation and impairment losses (3 213) (193 118) (28 086) (71 865) (1 900) (13 888) – (312 070) Additions and transfers 43 2 214 504 393 1 325 2 435 34 343 41 257 Transfers of assets from customers – – 81 1 013 – – – 1 094 Commissioning of assets constructed 242 61 613 635 8 132 47 138 (70 807) – Basis adjustment – cash flow hedge reserve – – – – – – (74) (74) Finance cost capitalised 41 – – – – – – 6 147 6 147 Provisions capitalised 28 – (7 140) – – – – 1 090 (6 050) Disposals and write-offs (53) (960) (362) (166) (243) (61) (1 889) (3 734) Depreciation (126) (24 817) (1 785) (5 969) (86) (821) – (33 604) Carrying value at end of the year 8 790 405 991 49 692 80 953 19 305 6 076 115 179 685 986 Cost 12 041 620 980 79 412 158 594 21 172 20 104 115 179 1 027 482 Accumulated depreciation and impairment losses (3 251) (214 989) (29 720) (77 641) (1 867) (14 028) – (341 496) Company Carrying value at beginning of the year 6 735 373 481 – 77 768 15 118 2 643 127 348 603 093 Cost 9 540 562 717 – 149 792 16 050 13 097 127 348 878 544 Accumulated depreciation and impairment losses (2 805) (189 236) – (72 024) (932) (10 454) – (275 451) Additions and transfers 1 2 213 – 393 1 287 1 733 28 942 34 569 Transfers of assets from customers – – – 1 013 – – – 1 013 Commissioning of assets constructed 183 61 880 – 8 138 – 135 (70 336) – Basis adjustment – cash flow hedge reserve – – – – – – (74) (74) Finance cost capitalised 41 – – – – – – 4 340 4 340 Provisions capitalised 28 – (7 140) – – – – 1 090 (6 050) Disposals and write-offs (50) (960) – (166) (194) (46) (1 696) (3 112) Depreciation (93) (24 395) – (5 986) (25) (522) – (31 021) Carrying value at end of the year 6 776 405 079 – 81 160 16 186 3 943 89 614 602 758 Cost 9 602 615 698 – 158 975 17 150 14 303 89 614 905 342 Accumulated depreciation and impairment losses (2 826) (210 619) – (77 815) (964) (10 360) – (302 584) ABC 88 Land, Plant Equipment Work Total buildings Generating Transmitting Distributing Spares and under and and vehicles construction facilities other Note Rm Rm Rm Rm Rm Rm Rm Rm 2024 Group Carrying value at beginning of the year 8 777 388 721 48 007 76 432 14 139 4 368 127 895 668 339 Cost 11 888 559 303 74 597 143 222 16 038 17 975 127 895 950 918 Accumulated depreciation and impairment losses (3 111) (170 582) (26 590) (66 790) (1 899) (13 607) – (282 579) Additions and transfers 38 1 029 343 418 4 145 778 36 108 42 859 Transfers of assets from customers – – 2 876 – – – 878 Commissioning of assets constructed 78 14 319 4 166 5 765 110 83 (24 521) – Basis adjustment – cash flow hedge reserve – – – – – – (118) (118) Finance cost capitalised 41 – – – – – – 8 081 8 081 Provisions capitalised 28 – (2 253) – – – – (516) (2 769) Disposals and write-offs (79) (276) (146) (204) (41) (43) (560) (1 349) Depreciation (130) (26 459) (1 753) (5 737) (91) (801) – (34 971) Carrying value at end of the year 8 684 375 081 50 619 77 550 18 262 4 385 146 369 680 950 Cost 11 897 568 199 78 705 149 415 20 162 18 273 146 369 993 020 Accumulated depreciation and impairment losses (3 213) (193 118) (28 086) (71 865) (1 900) (13 888) – (312 070) Company Carrying value at beginning of the year 8 273 391 578 48 214 76 665 14 139 3 286 128 269 670 424 Cost 11 289 563 463 74 878 143 600 16 038 14 344 128 269 951 881 Accumulated depreciation and impairment losses (3 016) (171 885) (26 664) (66 935) (1 899) (11 058) – (281 457) Additions and transfers 32 1 030 343 418 4 144 471 36 268 42 706 Transfers of assets from customers – – 3 875 – – – 878 Commissioning of assets constructed 73 14 500 4 210 5 768 110 15 (24 676) – Basis adjustment – cash flow hedge reserve – – – – – – (118) (118) Finance cost capitalised 41 – – – – – – 8 081 8 081 Provisions capitalised 28 – (2 253) – – – – (516) (2 769) Disposals and write-offs (79) (276) (146) (204) (41) (29) (492) (1 267) Depreciation (128) (26 684) (1 766) (5 754) (91) (620) – (35 043) Disposal of business (1 436) (4 414) (50 858) – (3 143) (480) (19 468) (79 799) Carrying value at end of the year 6 735 373 481 – 77 768 15 118 2 643 127 348 603 093 Cost 9 540 562 717 – 149 792 16 050 13 097 127 348 878 544 Accumulated depreciation and impairment losses (2 805) (189 236) – (72 024) (932) (10 454) – (275 451) The ongoing internal and external investigations (including by the SIU) into allegations of contract corruption are continuing. There could be further write-offs in the future as the investigations are ongoing and once advanced to the stage where the outcome is certain, the related accounting impact will be assessed and processed. Refer to note 2.4. The estimated useful lives for certain power stations were extended because the assets continued to operate beyond the planned decommissioning dates and the licence of Koeberg power station was extended by an additional 20 years resulting in a decrease in depreciation and provisions capitalised in 2025. Disposal and write-offs includes costs associated with Majuba Rail project and other assets written off during the year. ABC 89 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 8. Property, plant and equipment (continued) The total depreciation charge for property, plant and equipment is disclosed in profit or loss in the following categories: Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Depreciation and amortisation expense 38 33 593 34 959 31 010 35 031 Primary energy 11 12 11 12 33 604 34 971 31 021 35 043 Average rates of finance cost capitalised to qualifying assets: Group and company 2025 2024 % % General borrowings 10.05 10.52 Specific borrowings 8.36 9.51 Property, plant and equipment includes the following right-of-use asset balances: Land, Plant Equipment Total buildings Generating Spares and and and other vehicles facilities Rm Rm Rm Rm Rm 2025 Group Carrying value at beginning of the year 44 4 414 61 8 4 527 Cost 131 9 769 505 70 10 475 Accumulated depreciation and impairment losses (87) (5 355) (444) (62) (5 948) Additions and transfers 39 832 – 204 1 075 Disposals and write-offs (3) – – (8) (11) Depreciation (33) (657) (11) (80) (781) Carrying value at end of the year 47 4 589 50 124 4 810 Cost 122 10 600 505 206 11 433 Accumulated depreciation and impairment losses (75) (6 011) (455) (82) (6 623) Company Carrying value at beginning of the year 29 – 61 8 98 Cost 88 – 505 67 660 Accumulated depreciation and impairment losses (59) – (444) (59) (562) Additions and transfers – 832 – – 832 Disposals and write-offs (3) – – (8) (11) Depreciation (18) (6) (11) – (35) Carrying value at end of the year 8 826 50 – 884 Cost 49 832 505 – 1 386 Accumulated depreciation and impairment losses (41) (6) (455) – (502) 2024 Group Carrying value at beginning of the year 78 5 065 73 93 5 309 Cost 164 9 768 505 266 10 703 Accumulated depreciation and impairment losses (86) (4 703) (432) (173) (5 394) Additions 7 – – – 7 Disposals and write-offs (7) – – (4) (11) Depreciation (34) (651) (12) (81) (778) Carrying value at end of the year 44 4 414 61 8 4 527 Cost 131 9 769 505 70 10 475 Accumulated depreciation and impairment losses (87) (5 355) (444) (62) (5 948) Company Carrying value at beginning of the year 78 5 065 74 22 5 239 Cost 164 9 768 506 68 10 506 Accumulated depreciation and impairment losses (86) (4 703) (432) (46) (5 267) Additions 7 – – – 7 Disposals and write-offs (7) – – – (7) Depreciation (34) (651) (13) (14) (712) Disposal of business (15) (4 414) – – (4 429) Carrying value at end of the year 29 – 61 8 98 Cost 88 – 505 67 660 Accumulated depreciation and impairment losses (59) – (444) (59) (562) ABC 90 9. Intangible assets 2025 2024 Rights Computer Total Rights Computer Total software software Note Rm Rm Rm Rm Rm Rm Group Carrying value at beginning of the year 3 350 88 3 438 3 328 42 3 370 Cost 3 566 624 4 190 3 544 1 351 4 895 Accumulated amortisation and impairment losses (216) (536) (752) (216) (1 309) (1 525) Additions and transfers 65 92 157 22 63 85 Amortisation 38 – (25) (25) – (17) (17) Carrying value at end of the year 3 415 155 3 570 3 350 88 3 438 Cost 3 631 587 4 218 3 566 624 4 190 Accumulated amortisation and impairment losses (216) (432) (648) (216) (536) (752) Company Carrying value at beginning of the year 732 84 816 3 328 39 3 367 Cost 805 288 1 093 3 544 1 018 4 562 Accumulated amortisation and impairment losses (73) (204) (277) (216) (979) (1 195) Additions and transfers 16 81 97 22 62 84 Amortisation 38 – (23) (23) – (16) (16) Disposal of business – – – (2 618) (1) (2 619) Carrying value at end of the year 748 142 890 732 84 816 Cost 823 254 1 077 805 288 1 093 Accumulated amortisation and impairment losses (75) (112) (187) (73) (204) (277) 10. Future fuel supplies Group and company 2025 2024 Coal Nuclear Total Coal Nuclear Total Note Rm Rm Rm Rm Rm Rm Carrying value at beginning of the year 5 764 1 018 6 782 4 284 1 006 5 290 Additions 1 784 1 604 3 388 1 763 1 094 2 857 Provisions (reversed)/capitalised 28 (234) – (234) 382 – 382 Basis adjustment – cash flow hedge reserve – (119) (119) – (85) (85) Transfer to inventories 13 323 (2 501) (2 178) (665) (997) (1 662) Carrying value at end of the year 7 637 2 7 639 5 764 1 018 6 782 11. Investment in equity-accounted investees Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Balance at beginning of the year 346 350 95 95 Share of profit after tax 102 105 – – Dividends received (102) (109) – – Balance at end of the year 346 346 95 95 The group’s investments in joint ventures and associates are not individually material. The group’s share of the results of its joint ventures and associates, all of which are unlisted, is as follows: Group Company 2025 2024 2025 2024 Name Main Country of Interest Share of Share of Investment Investment business incorporation held profit profit/(loss) at cost at cost after tax after tax for the year for the year % Rm Rm Rm Rm Directly held Motraco – Mozambique Transmission Electricity Company SARL transmission Mozambique 33 101 112 95 95 Indirectly held Trans Africa Projects (Pty) Ltd Engineering services South Africa 50 1 (7) 102 105 The share capital of the group’s investment in joint ventures comprises ordinary shares. The joint ventures are structured as separate vehicles and the group has a residual interest in the net assets. The relevant activities are jointly controlled in accordance with the agreements under which the entities are established. The joint arrangements have therefore been classified as joint ventures. ABC 91 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 12. Investment in subsidiaries 2025 2024 Name Main business Interest Interest held held % % Directly held Escap SOC Ltd Insurance 100 100 Eskom Development Foundation NPC Corporate social investment 100 100 Eskom Enterprises SOC Ltd Non-regulated electricity supply industry activities in 100 100 South Africa and electricity supply and related services outside South Africa Eskom Finance Company SOC Ltd1 Finance (employee housing loans) 100 100 National Electricity Distribution Company of Distribution of electricity – not trading 100 100 South Africa SOC Ltd National Transmission Company South Africa SOC Ltd Transmission and trading of electricity 100 100 Indirectly held Eskom Rotek Industries SOC Ltd Construction and abnormal load transportation 100 100 Eskom Uganda Ltd2 Operations management – not trading 100 100 Golang Coal SOC Ltd Coal exports 67 67 Nqaba Finance 1 (RF) Ltd Residential backed mortgage securities 100 100 Pebble Bed Modular Reactor SOC Ltd3 Reactor-driven generation project – not trading 100 100 South Dunes Coal Terminal Company SOC Ltd Coal exports 69 69 2025 2024 Investment Investment at cost at cost Rm Rm Escap SOC Ltd 380 380 Eskom Development Foundation NPC – – Eskom Enterprises SOC Ltd –4 –4 Eskom Finance Company SOC Ltd – 4 –4 National Electricity Distribution Company of South Africa SOC Ltd –4 –4 National Transmission Company South Africa SOC Ltd5 26 331 22 201 26 711 22 581 Other 346 116 27 057 22 697 All subsidiaries continue to be accounted for as previously assessed as there has not been any change in the outcome of the control assessment. The group does not have any subsidiaries with a material non-controlling interest. All subsidiaries were incorporated in South Africa with the exception of Eskom Uganda Ltd which was incorporated in Uganda. 13. Inventories 2025 2024 Coal and Nuclear Maintenance Total Coal and Nuclear Maintenance Total liquid fuel fuel spares and liquid fuel fuel spares and consumables consumables Note Rm Rm Rm Rm Rm Rm Rm Rm Group Carrying value at beginning of the year 21 493 2 594 17 503 41 590 16 869 2 113 17 241 36 223 Changes in working capital 1 057 (582) 1 800 2 275 4 144 (614) (15) 3 515 Transfer from future fuel supplies 10 (323) 2 501 – 2 178 665 997 – 1 662 Provisions capitalised/(reversed) 28 245 75 – 320 (185) 98 – (87) Reversal of write down 36 – – 94 94 – – 277 277 22 472 4 588 19 397 46 457 21 493 2 594 17 503 41 590 Maturity analysis 22 472 4 588 19 397 46 457 21 493 2 594 17 503 41 590 Non-current 15 373 – – 15 373 13 297 – – 13 297 Current 7 099 4 588 19 397 31 084 8 196 2 594 17 503 28 293 Company Carrying value at beginning of the year 21 493 2 594 17 182 41 269 16 869 2 113 17 061 36 043 Changes in working capital 1 057 (582) 1 717 2 192 4 144 (614) (13) 3 517 Transfer from future fuel supplies 10 (323) 2 501 – 2 178 665 997 – 1 662 Provisions capitalised/(reversed) 28 245 75 – 320 (185) 98 – (87) Reversal of write down 36 – – 99 99 – – 279 279 Disposal of business – – – – – – (145) (145) 22 472 4 588 18 998 46 058 21 493 2 594 17 182 41 269 Maturity analysis 22 472 4 588 18 998 46 058 21 493 2 594 17 182 41 269 Non-current 15 373 – – 15 373 13 297 – – 13 297 Current 7 099 4 588 18 998 30 685 8 196 2 594 17 182 27 972 Nuclear fuel of R3 784 million (2024: R1 961 million) will be recovered more than 12 months after the reporting date. 1. The loan book of EFC and the interest in Nqaba (indirectly held) is in the process of being disposed of. Refer note 23. 2. Eskom Uganda Ltd is in the process of unwinding after the service concession arrangement in Uganda ended on 31 March 2023. 3. Eskom is seeking to dispose PBMR and its subsidiaries to the South African Nuclear Energy Corporation SOC Ltd subject to governance and regulatory approvals. 4. Nominal. 5. The investment increased by R4.1 billion as a result of NTCSA portion of debt relief from government that was converted to equity. ABC 92 14. Deferred tax Group Company Net assets/(liabilities) Assets 2025 2024 2025 2024 Note Rm Rm Rm Rm Reconciliation of movements in balances Balance at beginning of the year (10 331) 17 983 – 18 457 Recognised in profit or loss Raised temporary differences 42 63 8 304 731 8 061 Recognised in other comprehensive income Raised temporary differences 42 207 28 213 33 Disposal of business – – – 10 095 Assets and liabilities held-for-sale 23 (11) – – – Non-recognition of deferred tax asset 42 (1 310) (36 646) (944) (36 646) Balance at end of the year (11 382) (10 331) – – Comprising (11 382) (10 331) – – Property, plant and equipment (121 747) (117 017) (108 601) (104 996) Revenue not recognised 16 385 12 482 16 385 12 482 Tax losses 89 428 88 276 89 018 88 127 Derecognition of deferred tax asset (37 956) (36 646) (37 590) (36 646) Trade and other receivables 15 960 18 380 16 211 18 357 Payments made in advance (235) (198) (235) (198) Loans receivable 1 126 – 1 126 – Insurance investments (63) (10) – – Derivatives held for risk management 236 320 236 320 Embedded derivatives 1 049 (626) 1 049 (626) Provisions 12 922 14 815 12 725 14 771 Employee benefit obligations 7 275 6 055 6 572 5 553 Payments received in advance 4 238 3 838 3 104 2 856 The total net assets/(liabilities) for the group consists of assets of R7 million (2024: R81 million) and liabilities of R11 389 million (2024: R10 412 million). The group has R331 215 million (2024: R326 948 million) and the company has R329 696 million (2024: R326 396 million) of unused tax losses available for offset against future taxable income. The tax losses do not expire. The financial loss position of the company is mainly attributed to: • inadequate cost reflective tariffs approved by NERSA • use of OCGTs, both Eskom and IPPs, to prevent or minimise the impact of loadshedding and outages • increased non-payment by municipalities • high debt service costs • transmission division profit not part of Eskom from 1 April 2024 after the legal seperation to NTCSA Eskom transferred the assets and liabilities of the transmission division to NTCSA in terms of the intra group relief provisions in tax law and the Companies Act. The accounting date for the disposal of the transmission business to NTCSA was 31 March 2024 while the legal implementation date of the merger agreement and operationalisation of NTCSA was 1 July 2024. The taxable income for NTCSA from 1 April 2024 to 30 June 2024 was therefore included and taxed in Eskom. When an entity has a history of recent tax losses, the entity recognises in terms of IAS 12 Income Taxes a deferred tax asset from unused tax losses or credits only to the extent that the entity has sufficient taxable temporary differences or there is convincing evidence that sufficient taxable profit will be available against which the unused tax losses or credits can be utilised by the entity. The following factors and possible uncertainties have been considered in the assessment of sufficient future taxable income over the foreseeable future (2026 to 2030) of Eskom: • electricity price (tariff) path will be impacted by future MYPD applications and approvals effecting the future profitability of the company • favourable court rulings relating to tariff determinations which will impact the future profitability of the company • sustaining the current level of generation plant performance and the action plans addressing other operational challenges • decline in sales volumes and the potential impact of customers moving to alternative energy sources which impacts the future profitability of the group and company • growing trend of non-payment by municipalities will increase the revenue not recognised impacting the future profitability of the company • legal separation of the distribution business Management critically evaluated and assessed the various factors to determine the possible impact on the company future taxable income and the likely timing thereof. Eskom is expected to return to profitability within the foreseeable future as per the 2026 to 2030 Eskom Corporate Plan. It is probable, based on management’s assessment, that future taxable profits will be available because of the implementation of Eskom’s turnaround plan, NERSA’s revenue determination and the debt relief from government. The cumulative assessed loss is not expected to unwind over the period and a significant portion of the tax losses will remain unused by 2030. There is no persuasive evidence that the company will generate sufficient taxable income over the forecast period against which the unused tax losses can be utilised based on the deferred tax asset recoverability assessment at 31 March 2025, despite the company expecting to return to a tax paying position within the forecasted period. Future taxable income and the reversal of taxable temporary differences will be insufficient in the foreseeable future to recognise the deferred tax asset position in terms of IAS 12. ABC 93 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 14. Deferred tax (continued) The deferred tax asset relating to the unused tax losses should only be recognised to the extent that there are taxable temporary differences at 31 March 2025. Accordingly, the group has not recognised the deferred tax asset of R37 956 million arising from unused tax losses of R140 578 million and the company has not recognised the deferred tax asset of R37 590 million arising from unused tax losses of R139 222 million at 31 March 2025. 15. Loans receivable 2025 2024 Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm Group Home loans – – – 7 675 (283) 7 392 Municipal payment arrangement 1 864 – 1 864 – – – Other 28 – 28 385 (4) 381 1 892 – 1 892 8 060 (287) 7 773 Maturity analysis 1 892 – 1 892 8 060 (287) 7 773 Non-current 1 583 – 1 583 7 850 (285) 7 565 Current 309 – 309 210 (2) 208 Company Loans to subsidiaries 37 956 (419) 37 537 39 847 (422) 39 425 NTCSA term loan 31 929 (409) 31 520 34 199 (416) 33 783 EFC revolving credit facility 5 488 (3) 5 485 5 648 (6) 5 642 ERI term loan 539 (7) 532 – – – Municipal payment arrangement 1 864 – 1 864 – – – 39 820 (419) 39 401 39 847 (422) 39 425 Maturity analysis 39 820 (419) 39 401 39 847 (422) 39 425 Non-current 32 328 (394) 31 934 37 155 (340) 36 815 Current 7 492 (25) 7 467 2 692 (82) 2 610 Home loans and other loans in EFC have been classified as held-for-sale. Refer to note 23. The loan to EFC has been classified as current as it is expected that the loan will be settled after the EFC disposal group has been sold. Refer to note 23. Refer to note 5.1.5 for details regarding the loans. 16. Embedded derivatives Group and company 2025 2024 Asset Asset Note Rm Rm Balance at beginning of the year 11 801 823 Day-one fair value recognised in deferred income 26 – 9 279 Net fair value (loss)/gain 39 (7 829) 1 699 Balance at end of the year 3 972 11 801 Maturity analysis 3 972 11 801 Non-current 3 847 10 486 Current 125 1 315 The decrease in embedded derivatives and increase in net fair value loss is because of the downturn in the ferrochrome market resulting in reduced consumption forecasts and a lower ferrochrome spot price. Refer to note 4.1 for the valuation assumptions and sensitivity analysis. ABC 94 17. Derivatives held for risk management Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2025 Group Net (liability)/asset at beginning of the year (98) 26 003 210 7 (27) 328 26 423 Net fair value (loss)/gain (4 190) (5 263) (478) 4 10 123 (9 794) Recognised in profit or loss 39 (3 894) (7 340) (478) 4 10 123 (11 575) Recognised in other comprehensive income (296) 2 077 – – – – 1 781 Transfers – – – (51) – – (51) Finance cost accrued – 102 – – – 172 274 Cash paid/(received) 4 162 (7 564) 191 57 – – (3 154) Net (liability)/asset at end of the year (126) 13 278 (77) 17 (17) 623 13 698 Hedge exposure covered (126) 13 278 (77) 17 (17) 623 13 698 Debt securities and borrowings (61) 13 278 – – (17) 623 13 823 Other (65) – (77) 17 – – (125) Assets Economic hedging 264 2 872 3 23 – 623 3 785 Cash flow hedging 34 11 526 – – – – 11 560 298 14 398 3 23 – 623 15 345 Maturity analysis 298 14 398 3 23 – 623 15 345 Non-current 2 12 834 – – – 484 13 320 Current 296 1 564 3 23 – 139 2 025 Liabilities Economic hedging 347 802 80 6 17 – 1 252 Cash flow hedging 77 318 – – – – 395 424 1 120 80 6 17 – 1 647 Maturity analysis 424 1 120 80 6 17 – 1 647 Non-current – 819 – – 17 – 836 Current 424 301 80 6 – – 811 Notional amount per currency m m m m m m m EUR 432 521 – – – – 953 USD 1 902 5 161 – – – – 7 063 GBP 25 – – – – – 25 CNY – 2 786 – – – – 2 786 JPY 641 – – – – – 641 SEK 185 – – – – – 185 ZAR – – – – 282 3 777 4 059 Notional amount per commodity Unit Group and company Low sulphur gas oil kilo litres – – 72 000 31 000 – – 103 000 ABC 95 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 17. Derivatives held for risk management (continued) Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2025 Company Net (liability)/asset at beginning of the year (71) 26 003 210 7 (27) 328 26 450 Net fair value (loss)/gain (4 005) (5 263) (478) 4 10 123 (9 609) Recognised in profit or loss 39 (3 709) (7 340) (478) 4 10 123 (11 390) Recognised in other comprehensive income (296) 2 077 – – – – 1 781 Transfers – – – (51) – – (51) Finance cost accrued – 102 – – – 172 274 Cash paid/(received) 3 982 (7 564) 191 57 – – (3 334) Net (liability)/asset at end of the year (94) 13 278 (77) 17 (17) 623 13 730 Hedge exposure covered (94) 13 278 (77) 17 (17) 623 13 730 Debt securities and borrowings (61) 13 278 – – (17) 623 13 823 Other (33) – (77) 17 – – (93) Assets Economic hedging 314 2 872 3 23 – 623 3 835 Cash flow hedging 34 11 526 – – – – 11 560 348 14 398 3 23 – 623 15 395 Maturity analysis 348 14 398 3 23 – 623 15 395 Non-current 2 12 834 – – – 484 13 320 Current 346 1 564 3 23 – 139 2 075 Liabilities Economic hedging 365 802 80 6 17 – 1 270 Cash flow hedging 77 318 – – – – 395 442 1 120 80 6 17 – 1 665 Maturity analysis 442 1 120 80 6 17 – 1 665 Non-current – 819 – – 17 – 836 Current 442 301 80 6 – – 829 Notional amount per currency m m m m m m m EUR 391 521 – – – – 912 USD 1 798 5 161 – – – – 6 959 GBP 25 – – – – – 25 CNY – 2 786 – – – – 2 786 JPY 641 – – – – – 641 SEK 153 – – – – – 153 ZAR – – – – 282 3 777 4 059 ABC 96 Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2024 Group Net asset/(liability) at beginning of the year 218 24 784 (231) – (87) 279 24 963 Net fair value gain/(loss) 1 625 10 639 499 (51) 65 (28) 12 749 Recognised in profit or loss 39 1 361 11 396 499 (51) 65 (28) 13 242 Recognised in other comprehensive income 264 (757) – – – – (493) Transfers – – – 51 – – 51 Finance cost accrued – 153 – – (5) 77 225 Cash (received)/paid (1 941) (9 573) (58) 7 – – (11 565) Net (liability)/asset at end of the year (98) 26 003 210 7 (27) 328 26 423 Hedge exposure covered (98) 26 003 210 7 (27) 328 26 423 Debt securities and borrowings 1 26 003 – – (27) 328 26 305 Other (99) – 210 7 – – 118 Assets Economic hedging 209 4 819 210 7 – 329 5 574 Cash flow hedging 56 21 386 – – – – 21 442 265 26 205 210 7 – 329 27 016 Maturity analysis 265 26 205 210 7 – 329 27 016 Non-current – 18 543 12 – – 326 18 881 Current 265 7 662 198 7 – 3 8 135 Liabilities Economic hedging 318 12 – – 27 1 358 Cash flow hedging 45 190 – – – – 235 363 202 – – 27 1 593 Maturity analysis 363 202 – – 27 1 593 Non-current – – – – 27 – 27 Current 363 202 – – – 1 566 Notional amount per currency m m m m m m m EUR 655 579 – – – – 1 234 USD 2 294 6 252 – – – – 8 546 GBP 22 – – – – – 22 JPY 40 – – – – – 40 SEK 312 – – – – – 312 ZAR – – – – 372 1 000 1 372 Notional amount per commodity Unit Group and company Copper tons – – 22 – – – 22 Low sulphur gas oil kilo litres – – 278 000 (74 000) – – 204 000 ABC 97 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 17. Derivatives held for risk management (continued) Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2024 Company Net asset/(liability) at beginning of the year 218 24 784 (231) – (87) 279 24 963 Net fair value gain/(loss) 1 621 10 639 499 (51) 65 (28) 12 745 Recognised in profit or loss 39 1 357 11 396 499 (51) 65 (28) 13 238 Recognised in other comprehensive income 264 (757) – – – – (493) Transfers – – – 51 – – 51 Finance cost accrued – 153 – – (5) 76 224 Cash (received)/paid (1 937) (9 573) (58) 7 – 1 (11 560) Disposal of business 27 – – – – – 27 Net (liability)/asset at end of the year (71) 26 003 210 7 (27) 328 26 450 Hedge exposure covered (71) 26 003 210 7 (27) 328 26 450 Debt securities and borrowings 1 26 003 – – (27) 328 26 305 Other (72) – 210 7 – – 145 Assets Economic hedging 236 4 819 210 7 – 329 5 601 Cash flow hedging 56 21 386 – – – – 21 442 292 26 205 210 7 – 329 27 043 Maturity analysis 292 26 205 210 7 – 329 27 043 Non-current – 18 543 12 – – 326 18 881 Current 292 7 662 198 7 – 3 8 162 Liabilities Economic hedging 318 12 – – 27 1 358 Cash flow hedging 45 190 – – – – 235 363 202 – – 27 1 593 Maturity analysis 363 202 – – 27 1 593 Non-current – – – – 27 – 27 Current 363 202 – – – 1 566 Notional amount per currency m m m m m m m EUR 615 579 – – – – 1 194 USD 2 246 6 252 – – – – 8 498 GBP 22 – – – – – 22 JPY 40 – – – – – 40 SEK 268 – – – – – 268 ZAR – – – – 372 1 000 1 372 The hedging practices and accounting treatment are disclosed in note 2.10.3 in the accounting policies. The derivative instruments used to hedge the various financial risks are set out as follows: Derivative instrument Financial risk hedged Exposure Foreign exchange contracts Market (currency) Electricity generation, transmission and distribution activity purchases and loans denominated in foreign currencies Cross-currency swaps Market (currency and interest rate) Foreign fixed rate bonds and other foreign fixed or floating borrowings Commodity forwards and options Market (commodity) Liquid fuel purchases for electricity generation activities and base metal exposure relating to a component of plant, equipment or inventory Credit default swaps Credit Event of default by Eskom on debt securities and borrowings Inflation-linked swaps Market (interest rate) Finance cost that are dependent on current interest rates ABC 98 Cash flow hedges Contractual cash flows are a function of foreign exchange and interest rates and are a point-in-time calculation that are impacted by market conditions at that time. This may result in future contractual cash outflows or inflows even though the fair value of the derivative may be reflected as an asset or liability. Group and company Carrying Un- 0–3 4–12 1–5 >5 years amount discounted months months years cash flows Rm Rm Rm Rm Rm Rm The periods in which the cash flows of derivatives designated as cash flow hedges are expected to occur are: 2025 Foreign exchange contracts Assets 34 37 8 29 – – Liabilities (77) (74) (59) (15) – – Cross-currency swaps Assets 11 526 16 920 7 417 14 190 2 306 Liabilities (318) (1 605) (148) (1 482) (93) 118 11 165 15 278 (192) (1 051) 14 097 2 424 2024 Foreign exchange contracts Assets 56 62 13 49 – – Liabilities (45) (43) (27) (16) – – Cross-currency swaps Assets 21 386 31 606 120 6 573 17 094 7 819 Liabilities (190) (1 293) (48) (1 245) – – 21 207 30 332 58 5 361 17 094 7 819 The periods in which the cash flows associated with derivatives are expected to impact profit or loss are: 2025 Foreign exchange contracts Assets 34 5 559 29 114 442 4 974 Liabilities (77) (74) (59) (15) – – Cross-currency swaps Assets 11 526 16 920 7 417 14 190 2 306 Liabilities (318) (1 605) (148) (1 482) (93) 118 11 165 20 800 (171) (966) 14 539 7 398 2024 Foreign exchange contracts Assets 56 5 509 36 123 544 4 806 Liabilities (45) (43) (27) (16) – – Cross-currency swaps Assets 21 386 31 606 120 6 573 17 094 7 819 Liabilities (190) (1 293) (48) (1 245) – – 21 207 35 779 81 5 435 17 638 12 625 Ineffective cash flow hedges The change in the fair value of the hedging instrument of R5 310 million (2024: R2 603 million) and for the hedged item (represented by a hypothetical derivative) of R6 520 million (2024: R2 326 million) were used to calculate hedge effectiveness. The cash flow hedge reserve is adjusted to the lower in absolute amounts of the cumulative gain or loss of the hedging instrument and hedged item from inception of each hedge. During the year a gain of R1 278 million (2024: R37 million) was recognised in profit or loss as ineffectiveness. Refer to note 39. Day-one (loss)/gain The group recognises a day-one (loss)/gain on initial recognition of cross-currency swaps held as hedging instruments where applicable. Group and company Cross- Inflation- Total currency linked swaps swaps Rm Rm Rm Loss at 31 March 2023 (1 497) (13) (1 510) Day-one loss recognised (168) – (168) Amortised to profit or loss 262 3 265 Loss at 31 March 2024 (1 403) (10) (1 413) Day-one gain/(loss) recognised 128 (79) 49 Amortised to profit or loss 230 16 246 Loss at 31 March 2025 (1 045) (73) (1 118) ABC 99 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 18. Finance lease receivables 2025 2024 Gross Unearned Allowance Carrying Gross Unearned Allowance Carrying receivables finance for value receivables finance for value income impairment income impairment Rm Rm Rm Rm Rm Rm Rm Rm Group Non-current 179 (39) (2) 138 234 (58) (2) 174 Between one and five years 153 (35) (2) 116 186 (51) (2) 133 After five years 26 (4) – 22 48 (7) – 41 Current 55 (19) – 36 61 (24) – 37 234 (58) (2) 174 295 (82) (2) 211 Company Non-current 117 (27) (1) 89 149 (39) (1) 109 Between one and five years 94 (24) (1) 69 107 (32) (1) 74 After five years 23 (3) – 20 42 (7) – 35 Current 14 (11) – 3 35 (13) – 22 131 (38) (1) 92 184 (52) (1) 131 19. Payments made in advance 2025 2024 Securing Environ- Other Total Securing Environ- Other Total debt raised mental debt raised mental rehabili- rehabili- tation tation trust fund trust fund Rm Rm Rm Rm Rm Rm Rm Rm Group Balance at beginning of the year 653 1 316 1 237 3 206 692 1 256 1 104 3 052 Payments made 131 – 874 1 005 426 – 912 1 338 Recognised in profit or loss – 138 (723) (585) – 60 (386) (326) Transfers (523) – (265) (788) (465) – (393) (858) Balance at end of the year 261 1 454 1 123 2 838 653 1 316 1 237 3 206 Maturity analysis 261 1 454 1 123 2 838 653 1 316 1 237 3 206 Non-current 100 1 454 175 1 729 154 1 316 323 1 793 Current 161 – 948 1 109 499 – 914 1 413 Company Balance at beginning of the year 653 1 316 1 122 3 091 692 1 256 1 069 3 017 Payments made 131 – 812 943 426 – 843 1 269 Recognised in profit or loss – 138 (617) (479) – 60 (374) (314) Transfers (523) – (247) (770) (465) – (393) (858) Disposal of business – – – – – – (23) (23) Balance at end of the year 261 1 454 1 070 2 785 653 1 316 1 122 3 091 Maturity analysis 261 1 454 1 070 2 785 653 1 316 1 122 3 091 Non-current 100 1 454 263 1 817 154 1 316 322 1 792 Current 161 – 807 968 499 – 800 1 299 ABC 100 20. Trade and other receivables 2025 2024 Receivable Amounts Allowance Carrying Receivable Amounts Allowance Carrying before not meeting for value before not meeting for value collectability collectability impairment collectability collectability impairment adjustments criteria adjustments criteria Rm Rm Rm Rm Rm Rm Rm Rm Group Financial instruments Trade receivables International 3 165 – (530) 2 635 2 397 – (597) 1 800 Local large power users 109 565 (74 459) (5 977) 29 129 93 022 (59 875) (4 953) 28 194 Municipalities 95 771 (74 459) (5 387) 15 925 80 154 (59 875) (4 359) 15 920 Other 13 794 – (590) 13 204 12 868 – (594) 12 274 Local small power users 5 518 (1 055) (1 345) 3 118 5 860 (1 668) (1 191) 3 001 Soweto 1 055 (1 055) – – 1 668 (1 668) – – Other 4 463 – (1 345) 3 118 4 192 – (1 191) 3 001 118 248 (75 514) (7 852) 34 882 101 279 (61 543) (6 741) 32 995 Other receivables 2 903 – (596) 2 307 3 033 – (592) 2 441 121 151 (75 514) (8 448) 37 189 104 312 (61 543) (7 333) 35 436 Non-financial instruments 9 711 9 711 4 570 4 570 VAT 1 652 1 652 73 73 Diesel rebate 2 239 2 239 – – VAT on cash basis receivables 5 820 5 820 4 497 4 497 130 862 (75 514) (8 448) 46 900 108 882 (61 543) (7 333) 40 006 Maturity analysis 130 862 (75 514) (8 448) 46 900 108 882 (61 543) (7 333) 40 006 Non-current 5 033 – (56) 4 977 4 090 – (59) 4 031 Current 125 829 (75 514) (8 392) 41 923 104 792 (61 543) (7 274) 35 975 Company Financial instruments Trade receivables International 13 – – 13 15 – – 15 Local large power users 109 565 (74 459) (5 977) 29 129 93 022 (59 875) (4 953) 28 194 Municipalities 95 771 (74 459) (5 387) 15 925 80 154 (59 875) (4 359) 15 920 Other 13 794 – (590) 13 204 12 868 – (594) 12 274 Local small power users 5 518 (1 055) (1 345) 3 118 5 860 (1 668) (1 191) 3 001 Soweto 1 055 (1 055) – – 1 668 (1 668) – – Other 4 463 – (1 345) 3 118 4 192 – (1 191) 3 001 115 096 (75 514) (7 322) 32 260 98 897 (61 543) (6 144) 31 210 Other receivables 24 251 – (582) 23 669 4 607 – (308) 4 299 139 347 (75 514) (7 904) 55 929 103 504 (61 543) (6 452) 35 509 Non-financial instruments 8 059 8 059 4 497 4 497 Diesel rebate 2 239 2 239 – – VAT on cash basis receivables 5 820 5 820 4 497 4 497 147 406 (75 514) (7 904) 63 988 108 001 (61 543) (6 452) 40 006 Maturity analysis 147 406 (75 514) (7 904) 63 988 108 001 (61 543) (6 452) 40 006 Non-current 5 522 – (13) 5 509 4 368 – (12) 4 356 Current 141 884 (75 514) (7 891) 58 479 103 633 (61 543) (6 440) 35 650 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Reconciliation of movements in amounts not meeting collectability criteria Balance at beginning of the year 61 543 53 340 61 543 53 340 Revenue not meeting collectability criteria 32 23 797 17 245 23 797 17 245 Finance income not meeting collectability criteria 40 2 520 (242) 2 520 (242) Cash basis revenue recognised 32 (11 864) (8 347) (11 864) (8 347) Write-offs (482) (453) (482) (453) Balance at end of the year 75 514 61 543 75 514 61 543 Refer to note 5.1.1 for a reconciliation of the movements in allowance for impairment. ABC 101 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 21. Investments Portfolio Managed by Purpose Treasury Treasury division To maintain ring-fenced funds over the remaining life of Koeberg power station for nuclear decommissioning activities in line with the requirements of the National Nuclear Regulator Act, 47 of 1999. Insurance Escap To maintain adequate ring-fenced capital reserves to meet the statutory solvency requirements of the Insurance Act, 18 of 2017. 2025 2024 Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm 21.1 Treasury investments Group and company Fixed deposits 2 649 (11) 2 638 1 028 (4) 1 024 Maturity analysis Non-current 2 649 (11) 2 638 1 028 (4) 1 024 21.2 Insurance investments Group Negotiable certificates of deposit 17 124 (68) 17 056 13 911 (11) 13 900 Floating rate notes 2 896 (10) 2 886 2 038 (14) 2 024 Inflation-linked bonds 508 (1) 507 1 037 (9) 1 028 Listed shares 1 869 – 1 869 1 550 – 1 550 22 397 (79) 22 318 18 536 (34) 18 502 Maturity analysis 22 397 (79) 22 318 18 536 (34) 18 502 Non-current 3 404 (11) 3 393 2 038 (14) 2 024 Current 18 993 (68) 18 925 16 498 (20) 16 478 Group Total investments 25 046 (90) 24 956 19 564 (38) 19 526 Maturity analysis 25 046 (90) 24 956 19 564 (38) 19 526 Non-current 6 053 (22) 6 031 3 066 (18) 3 048 Current 18 993 (68) 18 925 16 498 (20) 16 478 22. Cash and cash equivalents Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Bank balances 31 684 10 865 30 680 10 245 Fixed deposits 32 077 12 720 32 077 12 720 63 761 23 585 62 757 22 965 23. Assets and liabilities held-for-sale The disposal of EFC is a key condition in the Eskom Debt Relief Act, 7 of 2023, and will remain a priority until all outstanding approvals are in place and the disposal process has been finalised. A binding offer from African Bank Limited for the sale of the EFC loan book and interest in Nqaba (disposal group) was approved by the Eskom board on 25 October 2024 (subject to PFMA approval) after a restricted market tender process was followed with a request for proposal offered to and accepted by four pre-approved bidders. The Minister of Electricity and Energy granted PFMA approval for the disposal in terms of section 54 and for the guarantee in terms of section 66 on 13 February 2025 and 25 March 2025 respectively. National Treasury was in support of the disposal at 31 March 2025 and granted approval in terms of section 54 of the PFMA on 11 April 2025. Management considered all outstanding approvals on 31 March 2025 and assessed that the approvals will be finalised within 12 months, including the Sale of Business Agreement and the Eskom Support and Guarantee Agreement which were concluded and signed on 2 April 2025 and 3 July 2025 respectively. Outstanding approvals are being obtained from the Competition Tribunal, as recommended by the Competition Commission on 16 September 2025 (for both EFC and African Bank Limited) and the Prudential Authority (South African Reserve Bank) (for African Bank Limited). The outstanding approvals are not substantive and it is highly probable that all approvals will be granted. The disposal is expected to be finalised before 31 March 2026. The conditions to the sale included continued future payroll deductions by Eskom for the loan book on behalf of African Bank Limited and that Eskom and African Bank Limited will have a definitive guarantee agreement in place to secure the home loan book. Eskom will continue to guarantee home loans to existing and future employees with a loan to value of above 80% which will result in a financial guarantee liability to Eskom. ABC 102 The risks and rewards of ownership of the loan book and interest in Nqaba will be substantially transferred to African Bank Limited on disposal. The continued salary deductions are administrative in nature. Eskom will retain some risk because it continues to guarantee the home loan book. Although the guarantee agreement exposes Eskom to the credit risk of the underlying loan receivable, the remaining credit risk is insignificant as it relates to the home loan book which is settled through salary deductions. It is therefore expected that the loan book will be derecognised on the effective date of the disposal. The assets and liabilities that form part of the disposal group were classified as held-for-sale in terms of IFRS 5 and were measured in terms of the applicable IFRS Accounting Standards (IFRS 9 and IAS 12) before classification in line with the scope specified in IFRS 5. There were no adjustments required upon reclassification to held-for-sale. The offer price of R5.7 billion from African Bank Limited included the EFC loan book and interest in Nqaba at 31 March 2024. The final selling price will be determined on the disposal date as the offer price fluctuates in line with the value of the loan book. The offer price is lower than the carrying value of R7.2 billion of the disposal group at 31 March 2025 and will result in a loss upon disposal. The expected loss is seen as a justifiable outcome of the disposal as previous delays in the disposal of EFC resulted in deductions from the debt relief granted by National Treasury to Eskom. The expected loss on disposal will be accounted for in the next financial year on the effective date. A liability, similar in nature to the current financial guarantee provided by Eskom to EFC, will be raised for the financial guarantee to African Bank Limited from the effective date of the disposal. Refer to note 45. EFC is included under all other segments in the segment report. The disposal group consists of: Eskom Finance Company Rm 2025 Group Summarised statements of financial position Assets Loans receivable 7 761 Trade and other receivables 11 Deferred tax 11 Taxation 2 Cash and cash equivalents 26 7 811 Liabilities Debt securities and borrowings 606 24. Share capital Group and company 2025 2024 Shares Shares Authorised ordinary shares Balance at beginning of the year 300 000 000 000 300 000 000 000 Additional ordinary shares authorised 200 000 000 000 – Balance at end of the year 500 000 000 000 300 000 000 000 Issued Balance at beginning of the year 241 550 276 001 241 550 276 001 Share capital issued 76 000 000 000 – Balance at end of the year 317 550 276 001 241 550 276 001 Unissued 182 449 723 999 58 449 723 999 The unissued share capital is under the control of the Government of the Republic of South Africa, represented by the Minister of Electricity and Energy, as the shareholder representative. Shares to the value of R44 billion were issued on 22 April 2024 and R32 billion on 19 August 2024. ABC 103 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 25. Debt securities and borrowings Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Eskom bonds 169 992 165 809 175 167 170 931 Commercial paper – 748 – – Eurorand zero coupon bonds 9 077 8 045 9 077 8 045 Foreign bonds 39 419 64 551 39 419 64 551 Development financing institutions 133 562 139 270 133 562 139 270 Export credit facilities 20 063 25 583 20 063 25 583 Other loans 542 8 194 21 386 11 905 372 655 412 200 398 674 420 285 Maturity analysis 372 655 412 200 398 674 420 285 Non-current 351 226 359 692 356 204 363 992 Current 21 429 52 508 42 470 56 293 Group Company Currency Security Interest rate Nominal Maturity Carrying value Carrying value number date 2025 2024 2025 2024 2025 2024 2025 2024 % % m m Rm Rm Rm Rm Eskom bonds 169 992 165 809 175 167 170 931 ZAR ES26 1, 2 9.26 9.26 37 987 37 987 Apr 26 33 794 33 392 38 969 38 514 ZAR EL281 2.55 2.55 6 278 6 278 May 28 11 877 11 494 11 877 11 494 ZAR EL291 1.90 1.90 5 370 5 370 Nov 29 9 646 9 304 9 646 9 304 ZAR EL301 2.30 2.30 5 136 5 136 Jul 30 8 777 8 478 8 777 8 478 ZAR EL311 2.10 2.10 5 699 5 699 Jun 31 9 194 8 864 9 194 8 864 ZAR ECN32 2.95 2.95 5 000 5 000 Mar 32 7 858 7 629 7 858 7 629 ZAR ES331 9.21 9.21 34 542 34 542 Sep 33 31 271 31 019 31 271 31 019 ZAR EL361 2.25 2.25 5 594 5 594 Jan 36 8 455 8 151 8 455 8 151 ZAR EL371 2.25 2.25 23 725 23 725 Jan 37 30 051 28 473 30 051 28 473 ZAR ES421 10.39 10.39 21 437 21 437 Apr 42 19 069 19 005 19 069 19 005 Commercial paper – 748 – – ZAR n/a – 10.70 – 291 May 52 3 – 294 – – ZAR n/a – 11.16 – 449 May 553 – 454 – – Eurorand zero coupon bonds4 9 077 8 045 9 077 8 045 ZAR n/a 13.33 13.33 8 000 8 000 Aug 27 5 938 5 240 5 938 5 240 ZAR n/a 11.89 11.89 7 500 7 500 Dec 32 3 139 2 805 3 139 2 805 Foreign bonds 39 419 64 551 39 419 64 551 USD n/a – 7.39 – 1 250 Feb 25 – 23 904 – 23 904 USD n/a1 5.42 5.42 500 500 Jul 27 8 965 19 122 8 965 19 122 USD n/a 8.47 8.47 500 500 Aug 28 9 251 9 588 9 251 9 588 USD n/a1 6.37 6.37 1 000 1 000 Aug 28 18 451 9 185 18 451 9 185 ZAR n/a1 14.15 14.15 2 753 2 753 Mar 31 2 752 2 752 2 752 2 752 Balances carried forward to the next page 218 488 239 153 223 663 243 527 1. Government guaranteed. 2. Includes, inter alia, instruments issued to subsidiaries. 3. Nqaba breached an early amortisation event trigger in June 2020. As a result, the cash flows from the assets in the securitisation structure are applied to repay the capital to all noteholders in a reducing order of rank (pari passu if equal rank) on a quarterly basis on or before the final maturity date, which is 32 years from the scheduled maturity date. 4. Holders have a right to first charge against revenue and assets of Eskom in terms of section 7 of the Eskom Conversion Act, 13 of 2001. ABC 104 Group Company Currency Security Interest rate Nominal Maturity Carrying value Carrying value number date 2025 2024 2025 2024 2025 2024 2025 2024 % % m m Rm Rm Rm Rm Balances carried forward from the previous page 218 488 239 153 223 663 243 527 Development financing institutions1 133 562 139 270 133 562 139 270 CNY n/a 2 3.50 – 2 786 – Sep 26 7 045 – 7 045 – ZAR n/a2 8.91 9.74 467 600 Aug 28 473 610 473 610 USD n/a2 6.52 6.95 68 87 Aug 28 1 252 1 672 1 252 1 672 EUR n/a2 3.96 4.33 283 346 Aug 29 5 637 7 142 5 637 7 142 ZAR n/a2 8.65 8.96 3 214 3 928 Aug 29 3 257 3 986 3 257 3 986 ZAR n/a2 10.10 10.10 1 771 2 164 Sep 29 1 767 2 162 1 767 2 162 USD n/a2 3.47 3.47 13 2 Sep 30 225 36 225 36 ZAR n/a 10.47 10.47 12 000 12 000 Jan 31 12 155 12 156 12 155 12 156 EUR n/a2 3.97 5.39 269 313 Feb 31 4 730 5 845 4 730 5 845 USD n/a2 5.96 6.39 4 5 Aug 31 73 87 73 87 USD n/a2 7.35 8.01 3 066 3 313 Sep 33 55 168 62 238 55 168 62 238 USD n/a2 8.27 8.70 6 7 Feb 36 106 121 106 121 ZAR n/a2 11.56 12.39 3 234 3 528 Feb 36 3 232 3 534 3 232 3 534 ZAR n/a2 9.14 9.14 23 765 25 531 May 38 24 670 26 519 24 670 26 519 USD n/a2 6.16 6.56 21 21 Aug 38 384 400 384 400 ZAR n/a2 9.05 9.39 1 698 837 Nov 38 1 704 857 1 704 857 USD n/a2 6.03 6.88 128 120 Mar 39 2 331 2 275 2 331 2 275 USD n/a2 6.47 6.36 2 1 Jun 42 37 21 37 21 ZAR n/a2 10.58 10.56 3 586 3 833 Nov 43 3 676 3 930 3 676 3 930 USD n/a2 0.25 0.25 232 237 May 51 4 255 4 496 4 255 4 496 USD n/a2 0.25 0.25 76 62 Feb 62 1 385 1 183 1 385 1 183 Export credit facilities 20 063 25 583 20 063 25 583 EUR n/a – 4.81 – 1 Jul 24 – 17 – 17 EUR n/a 5.14 4.81 49 147 Jan 27 953 2 928 953 2 928 EUR n/a 4.08 5.16 54 123 Jul 27 1 051 2 490 1 051 2 490 ZAR n/a 9.85 10.67 358 630 Jul 27 335 592 335 592 USD n/a2 10.11 10.99 750 750 Mar 29 13 598 14 076 13 598 14 076 USD n/a 2.32 2.32 248 315 Mar 31 4 126 5 480 4 126 5 480 Other loans and bonds3 542 8 194 21 386 11 905 ZAR n/a – 11.90 – 1 000 Apr 24 – 1 023 – 1 023 ZAR n/a – 14.84 – 791 Feb 25 – 717 – 717 ZAR n/a – 13.29 – 4 250 Feb 25 – 4 326 – 4 326 ZAR n/a 13.56 13.19 500 2 000 Feb 27 510 2 098 510 2 098 On ZAR n/a 7.53 10.50 20 876 3 740 demand – – 20 876 3 741 On ZAR n/a4 – – 32 30 demand 32 30 – – 372 655 412 200 398 674 420 285 1. Latest in a range of maturity dates is indicated for these instruments. 2. Government guaranteed. 3. Comprises of loans with various banking institutions. 4. Includes, inter alia, current accounts with subsidiaries that have no repayment terms. ABC 105 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 26. Payments received in advance and contract liabilities and deferred income Customer Government Other Total connections grant Note Rm Rm Rm Rm 26.1 Payments received in advance 2025 Group Balance at beginning of the year 6 862 1 763 688 9 313 Payments received 2 066 1 910 362 4 338 Transfers to contract liabilities and deferred income 26.2 (317) (2 398) – (2 715) Income recognised (426) (102) (243) (771) Balance at end of the year 8 185 1 173 807 10 165 Maturity analysis 8 185 1 173 807 10 165 Non-current 6 524 – 5 6 529 Current 1 661 1 173 802 3 636 Company Balance at beginning of the year 4 277 1 763 596 6 636 Payments received 1 508 1 910 270 3 688 Transfers to contract liabilities and deferred income 26.2 (212) (2 398) – (2 610) Income recognised (385) (102) (153) (640) Balance at end of the year 5 188 1 173 713 7 074 Maturity analysis 5 188 1 173 713 7 074 Non-current 3 586 – 84 3 670 Current 1 602 1 173 629 3 404 2024 Group Balance at beginning of the year 5 582 1 765 665 8 012 Payments received 1 977 3 060 238 5 275 Transfers to contract liabilities and deferred income 26.2 (296) (2 897) – (3 193) Income recognised (401) (165) (215) (781) Balance at end of the year 6 862 1 763 688 9 313 Maturity analysis 6 862 1 763 688 9 313 Non-current 4 891 – 122 5 013 Current 1 971 1 763 566 4 300 Company Balance at beginning of the year 5 582 1 765 657 8 004 Payments received 1 977 3 060 168 5 205 Transfers to contract liabilities and deferred income 26.2 (296) (2 897) – (3 193) Income recognised (401) (165) (215) (781) Disposal of business (2 585) – (14) (2 599) Balance at end of the year 4 277 1 763 596 6 636 Maturity analysis 4 277 1 763 596 6 636 Non-current 2 343 – 135 2 478 Current 1 934 1 763 461 4 158 ABC 106 Customer Government Embedded Total connections grant derivatives Note Rm Rm Rm Rm 26.2 Contract liabilities and deferred income 2025 Group Balance at beginning of the year 4 801 24 085 9 485 38 371 Transfers of property, plant and equipment from customers 644 – – 644 Transfers from payments received in advance 26.1 317 2 398 – 2 715 Income recognised 38 (384) (1 854) – (2 238) Amortisation of day-one fair value 39 – – (1 627) (1 627) Balance at end of the year 5 378 24 629 7 858 37 865 Maturity analysis 5 378 24 629 7 858 37 865 Non-current 5 074 22 736 6 231 34 041 Current 304 1 893 1 627 3 824 Company Balance at beginning of the year 3 763 24 085 9 485 37 333 Transfers of property, plant and equipment from customers 563 – – 563 Transfers from payments received in advance 26.1 212 2 398 – 2 610 Income recognised 38 (265) (1 854) – (2 119) Amortisation of day-one fair value 39 – – (1 627) (1 627) Balance at end of the year 4 273 24 629 7 858 36 760 Maturity analysis 4 273 24 629 7 858 36 760 Non-current 4 018 22 736 6 231 32 985 Current 255 1 893 1 627 3 775 2024 Group Balance at beginning of the year 4 499 22 925 673 28 097 Transfers of property, plant and equipment from customers 288 – – 288 Transfers from payments received in advance 26.1 296 2 897 – 3 193 Day-one fair value gain 16 – – 9 279 9 279 Income recognised 38 (282) (1 737) – (2 019) Amortisation of day-one fair value 39 – – (467) (467) Balance at end of the year 4 801 24 085 9 485 38 371 Maturity analysis 4 801 24 085 9 485 38 371 Non-current 4 520 22 310 7 857 34 687 Current 281 1 775 1 628 3 684 Company Balance at beginning of the year 4 499 22 925 673 28 097 Transfers of property, plant and equipment from customers 288 – – 288 Transfers from payments received in advance 26.1 296 2 897 – 3 193 Day-one fair value gain 16 – – 9 279 9 279 Income recognised 38 (282) (1 737) – (2 019) Amortisation of day-one fair value 39 – – (467) (467) Disposal of business (1 038) – – (1 038) Balance at end of the year 3 763 24 085 9 485 37 333 Maturity analysis 3 763 24 085 9 485 37 333 Non-current 3 521 22 310 7 857 33 688 Current 242 1 775 1 628 3 645 ABC 107 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 27. Employee benefit obligations Post- Pension Bonus Leave Total employment benefits medical benefits Note Rm Rm Rm Rm Rm 2025 Group Balance at beginning of the year 18 374 – 477 2 374 21 225 Recognised in profit or loss Employee benefit expense – raised 414 2 308 6 070 1 171 9 963 Finance cost 41 2 750 92 – – 2 842 Recognised in other comprehensive income Remeasurement of benefits 88 989 – – 1 077 Cash paid (930) (3 389) (2 630) (902) (7 851) Balance at end of the year 20 696 – 3 917 2 643 27 256 Maturity analysis 20 696 – 3 917 2 643 27 256 Non-current 19 672 – – – 19 672 Current 1 024 – 3 917 2 643 7 584 Company Balance at beginning of the year 17 138 – 375 1 853 19 366 Recognised in profit or loss Employee benefit expense – raised 374 1 598 4 457 932 7 361 Finance cost 41 2 559 92 – – 2 651 Recognised in other comprehensive income Remeasurement of benefits 109 989 – – 1 098 Cash paid (905) (2 679) (1 776) (728) (6 088) Transfers (43) – – – (43) Balance at end of the year 19 232 – 3 056 2 057 24 345 Maturity analysis 19 232 – 3 056 2 057 24 345 Non-current 18 237 – – – 18 237 Current 995 – 3 056 2 057 6 108 2024 Group Balance at beginning of the year 17 728 – 450 2 308 20 486 Recognised in profit or loss Employee benefit expense – raised 396 1 952 1 051 987 4 386 Finance cost 41 2 338 82 – – 2 420 Recognised in other comprehensive income Remeasurement of benefits (1 252) 627 – – (625) Cash paid (836) (2 661) (1 024) (921) (5 442) Balance at end of the year 18 374 – 477 2 374 21 225 Maturity analysis 18 374 – 477 2 374 21 225 Non-current 17 448 – – – 17 448 Current 926 – 477 2 374 3 777 Company Balance at beginning of the year 17 378 – 394 2 073 19 845 Recognised in profit or loss Employee benefit expense – raised 395 1 689 740 909 3 733 Finance cost 41 2 293 82 – – 2 375 Recognised in other comprehensive income Remeasurement of benefits (1 228) 627 – – (601) Cash paid (815) (2 398) (715) (843) (4 771) Disposal of business (885) – (44) (286) (1 215) Balance at end of the year 17 138 – 375 1 853 19 366 Maturity analysis 17 138 – 375 1 853 19 366 Non-current 16 236 – – – 16 236 Current 902 – 375 1 853 3 130 Refer to note 4 for relevant critical accounting estimates and assumptions. ABC 108 27.1 Post-employment medical benefits Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Actuarial (loss)/gain Financial assumptions (166) 1 134 (154) 1 136 Experience adjustments 78 118 45 92 (88) 1 252 (109) 1 228 Expected maturity analysis of undiscounted benefits Non-current 438 116 792 379 393 947 716 252 Between one and two years 1 098 1 018 1 065 989 Between two and five years 3 899 3 932 3 760 3 785 After five years 433 119 787 429 389 122 711 478 Current 1 024 926 995 902 439 140 793 305 394 942 717 154 The group expects to pay R1 024 million and the company R995 million in contributions to this plan in 2026. The reduction in the undiscounted benefits is largely attributable to a decrease in the medical inflation assumption. Refer to note 4.2 for the principal actuarial assumptions used and a sensitivity analysis. 27.2 Pension benefits Movement reconciliation Group and company 2025 2024 Fund Asset Fund Net asset/ Fund Asset Fund Net asset/ assets ceiling obligations (liability) assets ceiling obligations (liability) adjustment adjustment Rm Rm Rm Rm Rm Rm Rm Rm Asset/(liability) at beginning of the year 197 510 (80 361) (117 149) – 183 154 (74 530) (108 624) – Recognised in profit or loss Employee benefit expense – – (2 308) (2 308) – – (1 952) (1 952) Finance income/(cost) 29 357 (12 054) (17 395) (92) 23 933 (9 838) (14 177) (82) Recognised in other comprehensive income Remeasurement of benefits (5 619) 2 801 1 829 (989) (5 883) 4 007 1 249 (627) Return on plan assets in excess of finance cost (5 619) – – (5 619) (5 883) – – (5 883) Adjustment to asset ceiling – 2 801 – 2 801 – 4 007 – 4 007 Actuarial gain – – 1 829 1 829 – – 1 249 1 249 Payments received by the fund 5 066 – (1 677) 3 389 4 154 – (1 493) 2 661 Employer funded 3 389 – – 3 389 2 661 – – 2 661 Member funded 1 677 – (1 677) – 1 493 – (1 493) – Payments made by the fund (8 658) – 8 658 – (7 848) – 7 848 – Benefit and pension payments (7 816) – 7 816 – (7 040) – 7 040 – Fund management costs (435) – 435 – (378) – 378 – Net transfers (from)/to the fund (407) – 407 – (430) – 430 – Asset/(liability) at end of the year 217 656 (89 614) (128 042) – 197 510 (80 361) (117 149) – ABC 109 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 27. Employee benefit obligations (continued) 27.2 Pension benefits (continued) Fund assets composition Group and company 2025 2024 Domestic International Total Domestic International Total Rm Rm Rm Rm Rm Rm Equities 87 019 59 900 146 919 72 735 48 778 121 513 Bonds 40 282 1 942 42 224 34 482 6 922 41 404 Issued by Eskom 2 151 – 2 151 2 148 – 2 148 Other 38 131 1 942 40 073 32 334 6 922 39 256 Property 12 117 – 12 117 11 058 – 11 058 Cash 1 322 4 125 5 447 2 256 3 332 5 588 Hedge funds 38 – 38 1 787 – 1 787 Collective investment schemes – 10 911 10 911 – 16 161 16 161 140 778 76 878 217 656 122 318 75 193 197 511 Group and company 2025 2024 Rm Rm Actuarial gain Financial assumptions (2 275) 425 Experience adjustments 4 104 824 1 829 1 249 Expected maturity analysis of undiscounted benefits Non-current 1 578 754 2 872 110 Between one and two years 8 549 7 680 Between two and five years 28 704 27 009 After five years 1 541 501 2 837 421 Current 7 987 6 958 1 586 741 2 879 068 The group expects to pay R3 192 million and the company R2 505 million in contributions to this plan in 2026. The reduction in the undiscounted benefits is largely attributable to the decrease in the long-term price inflation, future salary inflation and future pension increase assumptions. Refer to note 4.3 for the principal actuarial assumptions used and a sensitivity analysis. 27.3 Bonus Bonus includes the annual, performance and production bonuses. The annual bonus comprises an accrual for a thirteenth cheque generally paid in November. Managerial employees can choose to spread the payment over the course of the year instead of receiving the full amount in November. ABC 110 28. Provisions Power station-related Mine-related Compensation Other Total environmental restoration closure, events Nuclear plant Other pollution and spent fuel generating control and plant rehabilitation Note Rm Rm Rm Rm Rm Rm 2025 Group Balance at beginning of the year 23 679 16 086 13 280 3 524 5 317 61 886 Recognised in profit or loss (2 082) (55) (72) 196 (1 764) (3 777) Raised 364 30 – 197 2 018 2 609 Reversed (2 427) (279) (116) (1) (3 782) (6 605) Change in discount rate (19) 194 44 – – 219 Capitalised to property, plant and equipment 8 (7 056) (84) – 1 090 – (6 050) Raised 361 25 – 1 523 – 1 909 Reversed (7 230) (455) – (433) – (8 118) Change in discount rate (187) 346 – – – 159 Capitalised to future fuel supplies 10 – – (234) – – (234) Raised – – 317 – – 317 Reversed – – (586) – – (586) Change in discount rate – – 35 – – 35 Capitalised to inventories 13 75 – 245 – – 320 Raised 75 – 274 – – 349 Reversed – – (29) – – (29) Finance cost 41 1 876 1 688 1 324 – (892) 3 996 Cash paid (424) – (303) (418) (1 720) (2 865) Balance at end of the year 16 068 17 635 14 240 4 392 941 53 276 Maturity analysis 16 068 17 635 14 240 4 392 941 53 276 Non-current 15 542 17 635 14 075 – 195 47 447 Current 526 – 165 4 392 746 5 829 Company Balance at beginning of the year 23 679 16 086 13 280 3 509 5 184 61 738 Recognised in profit or loss (2 082) (55) (72) 195 (1 994) (4 008) Raised 364 30 – 196 1 754 2 344 Reversed (2 427) (279) (116) (1) (3 748) (6 571) Change in discount rate (19) 194 44 – – 219 Capitalised to property, plant and equipment 8 (7 056) (84) – 1 090 – (6 050) Raised 361 25 – 1 523 – 1 909 Reversed (7 230) (455) – (433) – (8 118) Change in discount rate (187) 346 – – – 159 Capitalised to future fuel supplies 10 – – (234) – – (234) Raised – – 317 – – 317 Reversed – – (586) – – (586) Change in discount rate – – 35 – – 35 Capitalised to inventories 13 75 – 245 – – 320 Raised 75 – 274 – – 349 Reversed – – (29) – – (29) Finance cost 41 1 876 1 688 1 324 – (892) 3 996 Cash paid (424) – (303) (418) (1 632) (2 777) Balance at end of the year 16 068 17 635 14 240 4 376 666 52 985 Maturity analysis 16 068 17 635 14 240 4 376 666 52 985 Non-current 15 542 17 635 14 075 – 195 47 447 Current 526 – 165 4 376 471 5 538 ABC 111 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 28. Provisions (continued) Power station-related Mine-related Compensation Other Total environmental restoration closure, events Nuclear plant Other pollution and spent fuel generating control and plant rehabilitation Note Rm Rm Rm Rm Rm Rm 2024 Group Balance at beginning of the year 21 824 15 863 13 113 4 043 1 214 56 057 Recognised in profit or loss (192) 470 (1 074) 702 4 040 3 946 Raised 421 2 124 156 702 4 057 7 460 Reversed (284) (1 198) (305) – (17) (1 804) Change in discount rate (329) (456) (925) – – (1 710) Capitalised to property, plant and equipment 8 (289) (1 988) – (492) – (2 769) Raised – 18 – 2 412 – 2 430 Reversed (24) (1 893) – (2 904) – (4 821) Change in discount rate (265) (113) – – – (378) Capitalised to future fuel supplies 10 – – 382 – – 382 Raised – – 814 – – 814 Reversed – – (392) – – (392) Change in discount rate – – (40) – – (40) Capitalised to inventories 13 98 – (185) – – (87) Raised 98 – – – – 98 Reversed – – (185) – – (185) Finance cost 41 2 296 1 741 1 351 – 900 6 288 Cash paid (58) – (307) (729) (837) (1 931) Balance at end of the year 23 679 16 086 13 280 3 524 5 317 61 886 Maturity analysis 23 679 16 086 13 280 3 524 5 317 61 886 Non-current 23 153 16 086 13 055 – 267 52 561 Current 526 – 225 3 524 5 050 9 325 Company Balance at beginning of the year 21 824 15 863 13 113 4 043 1 130 55 973 Recognised in profit or loss (192) 470 (1 074) 702 3 946 3 852 Raised 421 2 124 156 702 3 963 7 366 Reversed (284) (1 198) (305) – (17) (1 804) Change in discount rate (329) (456) (925) – – (1 710) Capitalised to property, plant and equipment 8 (289) (1 988) – (492) – (2 769) Raised – 18 – 2 412 – 2 430 Reversed (24) (1 893) – (2 904) – (4 821) Change in discount rate (265) (113) – – – (378) Capitalised to future fuel supplies 10 – – 382 – – 382 Raised – – 814 – – 814 Reversed – – (392) – – (392) Change in discount rate – – (40) – – (40) Capitalised to inventories 13 98 – (185) – – (87) Raised 98 – – – – 98 Reversed – – (185) – – (185) Finance cost 41 2 296 1 741 1 351 – 901 6 289 Cash paid (58) – (307) (729) (779) (1 873) Disposal of business – – – (15) (14) (29) Balance at end of the year 23 679 16 086 13 280 3 509 5 184 61 738 Maturity analysis 23 679 16 086 13 280 3 509 5 184 61 738 Non-current 23 153 16 086 13 055 – 267 52 561 Current 526 – 225 3 509 4 917 9 177 Refer to note 4.5 for relevant critical accounting estimates and assumptions for the power station-related environmental restoration and mine-related closure, pollution control and rehabilitation related provisions and note 45.2 for compensation events. ABC 112 29. Lease liabilities 2025 2024 Gross Future Carrying Gross Future Carrying payables finance value payables finance value charges charges Rm Rm Rm Rm Rm Rm Group Non-current 9 250 (2 652) 6 598 9 794 (3 241) 6 553 Between one and five years 7 374 (2 447) 4 927 8 488 (3 154) 5 334 After five years 1 876 (205) 1 671 1 306 (87) 1 219 Current 2 143 (1 031) 1 112 1 750 (900) 850 11 393 (3 683) 7 710 11 544 (4 141) 7 403 Company Non-current 1 398 (405) 993 359 (107) 252 Between one and five years 792 (286) 506 324 (105) 219 After five years 606 (119) 487 35 (2) 33 Current 260 (142) 118 108 (47) 61 1 658 (547) 1 111 467 (154) 313 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Movement reconciliation Balance at beginning of the year 7 403 8 126 313 8 040 Additions 1 075 8 832 6 Disposals (11) (11) (11) (7) Finance costs 41 1 081 1 142 73 1 135 Cash paid (1 838) (1 862) (96) (1 772) Capital (783) (721) (49) (638) Finance costs (1 055) (1 141) (47) (1 134) Disposal of business – – – (7 089) Balance at end of the year 7 710 7 403 1 111 313 Refer to note 37 for short-term and low-value lease expenses. 30. Trade and other payables Financial instruments 51 734 47 912 66 849 39 703 Trade and other payables 34 564 31 555 50 316 23 891 Accruals 9 047 8 926 8 410 8 381 Deposits 8 123 7 431 8 123 7 431 Non-financial instruments 2 577 2 016 2 510 1 959 VAT 1 968 1 437 1 901 1 380 Environmental levy 609 579 609 579 54 311 49 928 69 359 41 662 Maturity analysis 54 311 49 928 69 359 41 662 Non-current 271 264 248 159 Current 54 040 49 664 69 111 41 503 31. Loan from shareholder Balance at beginning of the year 32 000 – 32 000 – Amounts advanced 64 000 76 000 64 000 76 000 Converted to equity (40 000) (44 000) (40 000) (44 000) Finance costs 132 – 132 – Balance at end of the year 56 132 32 000 56 132 32 000 Maturity analysis Current 56 132 32 000 56 132 32 000 The Minister of Finance approved the conversion to equity of R32 billion on 29 July 2024 and R8 billion on 21 October 2024. The interest rate on the loan from shareholder was 7.9% at 31 March 2025. ABC 113 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm 32. Revenue Redistributors (metropolitan and municipal customers) 133 301 115 460 133 301 115 460 Invoiced to customers 145 299 124 302 145 299 124 302 Amounts not meeting collectability criteria 20 (23 742) (17 081) (23 742) (17 081) Recognised on a cash received basis 20 11 744 8 239 11 744 8 239 Residential 8 597 7 615 8 597 7 615 Invoiced to customers 8 532 7 671 8 532 7 671 Amounts not meeting collectability criteria 20 (55) (164) (55) (164) Recognised on a cash received basis 20 120 108 120 108 Industrial 63 509 61 367 63 589 61 367 Mining 52 761 47 923 52 761 47 923 Commercial 24 869 20 900 24 869 20 900 Agricultural 16 291 13 858 16 291 13 858 International 21 611 11 457 390 11 457 Rail 4 333 3 835 4 333 3 835 Public lighting 354 317 354 317 Post-paid electricity sales 325 626 282 732 304 485 282 732 Prepaid electricity sales 13 275 11 329 13 275 11 329 Total electricity sales 338 901 294 061 317 760 294 061 Connections 1 260 1 273 1 100 1 273 Other 734 480 806 480 340 895 295 814 319 666 295 814 33. Other income Insurance proceeds 267 31 657 762 Services income 12 22 – – Management fee income – – 622 146 Operating lease income 268 277 141 207 Dividend income 72 74 102 889 Net gain on modification of loan receivable1 1 719 – 1 719 – Other 927 891 1 511 1 042 3 265 1 295 4 752 3 046 34. Primary energy Own generation costs 98 011 117 873 98 008 117 873 International electricity purchases 6 554 8 081 14 8 081 Independent power producers 45 642 47 775 – 47 775 Net internal energy costs – – 73 709 – 150 207 173 729 171 731 173 729 Generation costs include the cost of coal (including logistics), uranium, water and liquid fuels that are used in the generation of electricity. Eskom uses a combination of short-, medium- and long-term agreements with suppliers for coal purchases and long-term agreements with the Department of Water and Sanitation to reimburse the department for the cost incurred in supplying water to Eskom. Net internal energy costs relate to charges from NTCSA to Eskom for network, capacity and external energy purchases. Refer to note 7. 1. The net gain on modification of loan receivable relates to the payment arrangement with the City of Tshwane which resulted in the derecognition of the electricity receivable and recognition of a loan receivable. ABC 114 Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm 35. Employee benefit expense Salaries 29 537 27 083 23 378 24 387 Overtime 3 253 3 029 2 561 2 505 Post-employment medical benefits 414 396 374 395 Pension benefits 2 308 1 952 1 598 1 689 Annual bonus1 1 549 1 470 1 231 1 276 Performance bonus2 3 731 – 2 921 – Production bonus3 1 212 439 817 322 Leave 1 171 986 932 908 Direct costs of employment 43 175 35 355 33 812 31 482 Direct training and development 180 136 114 117 Temporary and contract staff costs 625 484 303 301 Other staff costs 1 378 1 124 1 084 1 070 Gross employee benefit expense 45 358 37 099 35 313 32 970 Capitalised to property, plant and equipment (2 198) (2 003) (1 893) (2 003) 43 160 35 096 33 420 30 967 36. Net impairment and write down of assets 36.1 Financial assets Loans receivable (25) 234 (5) 416 Finance lease receivables – (2) – (2) Trade and other receivables 5 7 313 2 800 7 642 2 695 Treasury investments 7 4 7 4 Insurance investments 45 14 – – 7 340 3 050 7 644 3 113 Bad debts recovered – trade and other receivables (23) (33) (23) (33) 7 317 3 017 7 621 3 080 36.2 Other assets Inventories 13 (94) (277) (99) (279) Trade and other receivables 393 693 393 693 299 416 294 414 7 616 3 433 7 915 3 494 37. Other expenses Managerial, technical and other fees 1 181 837 768 812 Lease expense 849 803 196 195 Short term 794 752 159 139 Low value 55 51 37 56 Auditors’ remuneration4 302 293 273 265 Audit of financial statements 292 286 263 259 Other assurance and related services 9 6 9 6 Regulatory related services 1 1 1 – Net loss on disposals and write-offs of property, plant and equipment and intangible assets 3 431 275 2 797 203 Repairs and maintenance, transport and other expenses 38 376 39 233 45 467 46 462 44 139 41 441 49 501 47 937 38. Depreciation and amortisation expense Depreciation of property, plant and equipment 8 33 593 34 959 31 010 35 031 Amortisation of intangible assets 9 25 17 23 16 Contract liabilities and deferred income recognised (government grant) 26.2 (1 854) (1 737) (1 854) (1 737) 31 764 33 239 29 179 33 310 1. The annual bonus represents a thirteenth cheque. Refer to note 27.3. 2. The performance bonus relates to the STI scheme which was reinstated with effect from 1 April 2024. 3. The production bonus is self-funded and rewards employees for improved efficiency, operational productivity and performance in the production environment as well as the reduction in the number of zero prepaid buyers in the distribution environment. 4. Presented in line with the International Ethics Standards Board for Accountants Code Disclosure Requirements. ABC 115 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm 39. Net fair value and foreign exchange (loss)/gain (Loss)/profit on items carried at fair value (17 525) 15 387 (17 592) 15 404 Insurance investments 252 (21) – – Derivatives held for risk management 17 (11 575) 13 242 (11 390) 13 238 Embedded derivatives 16 (7 829) 1 699 (7 829) 1 699 Deferred income 26 1 627 467 1 627 467 Gain/(loss) on foreign currency translation of items carried at amortised cost 5 832 (12 777) 5 831 (12 770) Cash and cash equivalents (63) 13 (63) 13 Trade and other payables (76) (33) (77) (26) Debt securities and borrowings 5 971 (12 757) 5 971 (12 757) Amounts recycled to profit or loss from cash flow hedge reserve 1 278 34 1 278 34 Amortisation of effective portion of terminated cash flow hedges – (3) – (3) Ineffective portion of cash flow hedges 1 278 37 1 278 37 (10 415) 2 644 (10 483) 2 668 40. Finance income Treasury investments 224 26 224 26 Insurance investments 1 754 1 535 – – Loans receivable 1 126 928 4 266 486 Finance lease receivables 24 28 13 28 Trade and other receivables 1 495 1 232 1 445 1 419 Invoiced to customers 4 015 990 3 965 1 177 Amounts not meeting collectability criteria 20 (2 520) 242 (2 520) 242 Cash and cash equivalents 2 217 1 110 2 211 1 030 6 840 4 859 8 159 2 989 Cash interest included in finance income comprises: Insurance investments 1 387 1 380 – – Loans receivable 910 928 3 660 468 Finance lease receivables 24 28 13 28 Trade and other receivables 441 412 395 412 Cash and cash equivalents 2 217 1 110 2 211 1 030 4 979 3 858 6 279 1 938 41. Finance cost Debt securities and borrowings 32 408 37 263 34 342 37 644 Eskom bonds 13 364 14 683 13 811 15 126 Commercial paper 72 87 – – Eurorand zero coupon bonds 1 032 917 1 032 917 Foreign bonds 4 281 5 077 4 281 5 077 Development financing institutions 10 858 11 649 10 858 11 649 Export credit facilities 2 158 2 652 2 158 2 652 Other loans 643 2 198 2 202 2 223 Derivatives held for risk management 4 723 3 705 4 723 3 705 Employee benefit obligations 27 2 842 2 420 2 651 2 375 Provisions 28 3 996 6 288 3 996 6 289 Lease liabilities 29 1 081 1 142 73 1 135 Trade and other payables 647 511 625 512 Loan from shareholder 382 – 382 – Gross finance cost 46 079 51 329 46 792 51 660 Capitalised to property, plant and equipment 8 (6 147) (8 081) (4 340) (8 081) 39 932 43 248 42 452 43 579 Cash interest included in finance cost comprises: Debt securities and borrowings 27 061 30 184 27 381 30 500 Derivatives held for risk management 4 998 3 929 4 998 3 929 Lease liabilities 1 055 1 140 47 1 134 Trade and other payables 26 4 4 4 Loan from shareholder 250 – 250 – 33 390 35 257 32 680 35 567 ABC 116 42. Income tax Group Company 2025 2024 2025 2024 Note Rm Rm Rm Rm Recognised in profit or loss Current tax 6 575 1 204 – – Current year 6 575 1 282 – – Over provided in prior years – (78) – – Deferred tax 1 247 28 342 213 28 585 Raised/(reversal) of temporary differences 1 089 (862) 160 (696) Raised/(reversal) of temporary differences 1 233 (1 254) 307 (1 089) (Over)/under provided in prior years (144) 392 (147) 393 Tax losses (1 152) (7 442) (891) (7 365) Reversal of temporary differences (1 296) (7 063) (1 038) (6 987) Under/(over) provided in prior years 144 (379) 147 (378) Derecognition of deferred tax asset 1 310 36 646 944 36 646 7 822 29 546 213 28 585 Reconciliation between standard and effective tax rate: R million Taxation income/(expense) at standard rate 6 445 (6 877) (3 268) (7 695) Non-taxable income (420) (369) (413) (590) Government grants (363) (322) (363) (322) Dividend income (18) (18) (28) (240) Incentive allowances (39) (29) (22) (28) Expenses not deductible for tax purposes 487 211 2 950 209 Non-deductible capital expenditure 1 447 183 302 181 NTCSA profit taxed in Eskom2 – – 2 608 – Donations 40 28 40 28 Prior period (under)/over provision – (65) – 15 Derecognition of deferred tax asset3 1 310 36 646 944 36 646 Taxation expense per the income statement 7 822 29 546 213 28 585 % Taxation income at standard rate 27.00 27.00 27.00 27.00 Non-taxable income (1.76) 1.44 3.41 2.07 Government grants (1.52) 1.26 3.00 1.13 Dividend income (0.08) 0.07 0.23 0.84 Incentive allowances (0.16) 0.11 0.18 0.10 Expenses not deductible for tax purposes 2.04 (0.83) (24.37) (0.73) Non-deductible capital expenditure1 1.87 (0.72) (2.49) (0.63) NTCSA profit taxed in Eskom2 – – (21.55) – Donations 0.17 (0.11) (0.33) (0.10) Adjustments to current tax of prior periods – 0.26 – (0.05) Derecognition of deferred tax asset3 5.49 (143.88) (7.80) (128.59) Taxation income/(expense) per the income statement 32.77 (116.01) (1.76) (100.30) 1. Non-deductible capital expenditure includes expenditure of a capital nature and not incurred in the production of income. 2. Eskom transferred the assets and liabilities of the transmission division to NTCSA with the accounting date for the disposal being 31 March 2024, while the legal implementation date of the merger agreement and operationalisation of NTCSA was 1 July 2024. The taxable income for NTCSA from 1 April 2024 to 30 June 2024 was therefore included and taxed in Eskom. 3. Deferred tax assets not recognised relate to the movement of the deferred tax on unused tax losses for the financial year. Refer to note 14. ABC 117 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 42. Income tax (continued) 2025 2024 Before tax Tax Net of tax Before tax Tax Net of tax Rm Rm Rm Rm Rm Rm Recognised in other comprehensive income Group Cash flow hedges 310 (84) 226 (730) 197 (533) Net change in fair value 1 781 (481) 1 300 (493) 133 (360) Net amount transferred to profit or loss (1 278) 345 (933) (34) 9 (25) Net amount transferred to initial carrying amount of hedged items (193) 52 (141) (203) 55 (148) Foreign currency translation differences – – – 6 – 6 Remeasurement of benefits (1 077) 291 (786) 625 (169) 456 (767) 207 (560) (99) 28 (71) Company Cash flow hedges 310 (84) 226 (730) 197 (533) Net change in fair value 1 781 (481) 1 300 (493) 133 (360) Net amount transferred to profit or loss (1 278) 345 (933) (34) 9 (25) Net amount transferred to initial carrying amount of hedged items (193) 52 (141) (203) 55 (148) Remeasurement of benefits (1 098) 297 (801) 601 (164) 437 (788) 213 (575) (129) 33 (96) 43. Cash generated from operations Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Profit/(loss) before tax 23 869 (25 469) (12 104) (28 499) Adjustments for: 89 625 79 563 85 357 80 331 Depreciation and amortisation expense 31 764 33 239 29 179 33 310 Depreciation expense – primary energy 11 12 11 12 Impairment and write down of assets (excluding bad debts recovered) 7 639 3 466 7 938 3 527 Net fair value gain/(loss) on financial instruments 10 415 (2 644) 10 483 (2 668) Net loss on disposals and write-offs of property, plant and equipment 3 431 275 2 797 203 Net gain on modification of loans receivable (1 719) – (1 719) – Transfer of assets from non-electricity purchasing customers (450) (590) (450) (590) Dividend income (72) (74) (102) (889) Increase in employee benefit obligations 9 963 4 386 7 361 3 733 (Increase)/decrease in provisions (3 777) 3 946 (4 008) 3 852 Decrease in contract liabilities and deferred income (384) (282) (265) (282) Payments made in advance recognised in profit or loss 585 326 479 314 Payments received in advance recognised in profit or loss (771) (781) (640) (781) Finance income (6 840) (4 859) (8 159) (2 989) Finance cost 39 932 43 248 42 452 43 579 Share of profit of equity-accounted investees (102) (105) – – 113 494 54 094 73 253 51 832 Changes in working capital: (20 128) (13 579) (12 649) (11 920) Increase in payments made in advance (856) (811) (794) (742) Increase in inventories (2 364) (3 498) (2 050) (3 500) Increase in trade and other receivables (12 902) (11 788) (31 901) (10 840) Increase in trade and other payables 2 156 4 481 27 057 4 466 Expenditure incurred on employee benefit obligations (7 851) (5 442) (6 088) (4 771) Expenditure incurred on provisions (2 649) (1 796) (2 561) (1 738) Increase in payments received in advance 4 338 5 275 3 688 5 205 93 366 40 515 60 604 39 912 ABC 118 44. Net debt reconciliation The net debt reconciliation includes the changes arising from financing activities. Debt Loan from Lease Derivatives Payments Cash and Net debt securities shareholder2 liabilities3 held for risk made in cash and management4 advance5 equivalents6 borrowings1 Rm Rm Rm Rm Rm Rm Rm Group Balance at 31 March 2023 423 929 – 8 126 (25 014) (692) (7 516) 398 833 Net cash (decrease)/increase (31 032) 76 000 (721) 10 992 (426) (16 050) 38 763 Net fair value and foreign exchange losses/(gains) 12 757 – – (12 057) – (13) 687 Foreign currency translation – – – – – (6) (6) Other movements 6 5467 (44 000) (2) (226) 465 – (37 217) Balance at 31 March 2024 412 200 32 000 7 403 (26 305) (653) (23 585) 401 060 Net cash (decrease)/increase (37 741) 64 000 (783) 4 555 (131) (40 265) (10 365) Net fair value and foreign exchange (gains)/losses (5 971) – – 8 201 – 63 2 293 Assets and liabilities held-for-sale – – – – – 26 26 Other movements 4 1677 (39 868) 1 090 (274) 523 – (34 362) Balance at 31 March 2025 372 655 56 132 7 710 (13 823) (261) (63 761) 358 652 Company Balance at 31 March 2023 428 377 – 8 040 (25 014) (692) (5 832) 404 879 Net cash (decrease)/increase (30 989) 76 000 (638) 10 992 (426) (17 120) 37 819 Net fair value and foreign exchange (gains)/losses 12 757 – – (12 057) – (13) 687 Disposal of business – – (7 089) (27) (23) – (7 139) Other movements 10 1407 (44 000) – (199) 488 – (33 571) Balance at 31 March 2024 420 285 32 000 313 (26 305) (653) (22 965) 402 675 Net cash (decrease)/increase (22 069) 64 000 (49) 4 555 (131) (39 855) 6 451 Net fair value and foreign exchange (gains)/losses (5 971) – – 8 201 – 63 2 293 Other movements 6 4297 (39 868) 847 (274) 523 – (32 343) Balance at 31 March 2025 398 674 56 132 1 111 (13 823) (261) (62 757) 379 076 Financing activities exclude cash and cash equivalents. 45. Financial guarantees, contingent liabilities and assets 45.1 Financial guarantees EFC loans to group employees EFC has granted loans (secured by mortgage bonds on the properties) to qualifying employees of the group. Eskom has issued guarantees to EFC to the extent to which the loan values of employees exceed the current value of the mortgage security. Eskom’s guarantee exposure is governed by the default probability of EFC, which is influenced by the risk of significant fluctuations in interest rates that might cause default on repayments. The risk-adjusted credit exposure of EFC is calculated by applying a rating agency’s annual default probabilities. Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Financial guarantee – – 191 206 45.2 Contingent liabilities Legal claims There are legal claims in process against Eskom as a result of disputes with various parties. Based on the evidence available, there is no present obligation relating to these claims. The claims are disclosed as a contingent liability and amounted to 40 6 38 3 Compensation events The final settlement of open compensation claims is generally far below the amount claimed by contractors. The adjudication rulings are mostly in favour of Eskom, resulting in no additional expenditure being incurred. Eskom recognises a provision based on the best estimate of the potential expenditure required to settle open compensation claims. There are uncertainties relating to the finalisation of open compensation events which are subject to a contractual adjudication process where the outcome could be different to management’s assessment of the probability of an outflow of resources and best estimate of the expenditure. The potential financial impact can therefore not be precisely determined due to the ongoing nature of the negotiations and the complexities involved. 1. Refer to note 25. 2. Refer to note 31. 3. Refer to note 29. 4. Refer to note 17 (hedge exposure covering debt securities and borrowings). 5. Refer to note 19 (securing debt raised). 6. Refer to note 22. 7. Mainly constitutes interest accrual. ABC 119 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 45. Financial guarantees, contingent liabilities and assets (continued) 45.2 Contingent liabilities (continued) Compensation events (continued) Eskom is actively engaging with the relevant parties to resolve matters in line with the contractual agreements. The group continuously monitors the developments related to these contingencies and will recognise the liabilities in the financial statements when it becomes probable that an outflow of resources will be required and the amount can be reasonably estimated. The estimated potential contingent liabilities at 31 March 2025 arising from compensation events were R4 507 million (2024: R6 683 million) considering the historical outcomes on similar matters. Claims from customers Some electricity customers occasionally submit claims against Eskom because of billing disputes. These claims are subject to a dispute investigations process of which the outcome is uncertain and the potential financial impact cannot be reliably determined. Non-technical energy losses The Eskom online vending system environment was compromised in the previous financial year which resulted in the creation of illicit prepaid electricity tokens for Eskom and those municipalities that make use of Eskom’s online vending platform. When an illicit token is loaded into a prepaid meter, the token will be accepted and update the meter with the available credit kilowatt hours. There is a cost associated with delivering electricity against the credit kilowatt hours for customers using illicit tokens. This results in non-technical losses for delivery against illicit tokens used and will also result in future non-technical losses for unused illicit tokens, as no corresponding revenue will be received. Refer to note 51.3 for the current non-technical losses experienced. The potential obligations emanating from the exposure that illicit tokens can be used in the future cannot be reliably measured because of the high level of uncertainty around the completeness of the number of illicit prepaid electricity tokens created as well as the number of tokens already used and those that remain compatible with Eskom meters after the key revision standard rollover (KRN 1 change to KRN 2). 45.3 Contingent assets There are certain negotiation processes underway by the SIU for the recovery of payments by Eskom arising from state capture. Further details are not currently available as Eskom is reliant on the process as controlled by the SIU. The outcome of these processes will be assessed once the details are made available to Eskom. 46. Commitments Group Company 2025 2024 2025 2024 Rm Rm Rm Rm 46.1 Capital expenditure Contracted capital expenditure 35 784 28 999 28 646 23 712 Within one year 22 350 17 417 21 441 16 949 One to five years 12 945 11 275 6 716 6 763 After five years 489 307 489 – Capital expenditure excludes finance costs capitalised and foreign currency fluctuations. The capital expenditure will be financed through drawdowns from existing project-related loan agreements and internally generated funds. The capital programme will be reviewed and reprioritised by management in line with the funds available. 46.2 Leases As lessee The future minimum lease payments payable under non-cancellable leases are: Within one year 684 646 33 31 Short-term leases 636 614 1 1 Low-value leases 47 32 31 30 Right-of-use leases not yet commenced 1 – 1 – One to five years 39 5 39 5 Low-value leases 35 5 35 5 Right-of-use leases not yet commenced 4 – 4 – Total 723 651 72 36 Short-term leases 636 614 1 1 Low-value leases 82 37 66 35 Right-of-use leases not yet commenced 5 – 5 – The lease payments payable under non-cancellable leases are of a similar nature to the right- of-use, short-term and low-value leases recognised in the statement of financial position and income statement. As lessor The future minimum lease payments receivable under non-cancellable operating leases are: 175 247 17 175 Within one year 134 153 8 90 One to five years 41 88 9 79 After five years – 6 – 6 The lease payments receivable under non-cancellable leases are of a similar nature to the right-of-use, short-term and low-value leases recognised in the statement of financial position and income statement. ABC 120 47. Related-party transactions and balances Eskom (and its subsidiaries) are classified as schedule 2 public entities in terms of the PFMA. Eskom is part of the national sphere of government and its related parties in that sphere include national departments (including the shareholder), constitutional institutions and public entities (schedule 1, 2 and 3). A list of related parties is provided by National Treasury on its website www.treasury.gov.za. Related parties include subsidiaries, associates and joint ventures of the group and post-employment benefit plans for the benefit of employees. It also includes key management personnel of Eskom and close family members of these related parties. Key management personnel for Eskom include the group’s board of directors and Exco. The related-party transactions with directors and key management personnel are disclosed in note 49 and government guarantees issued to Eskom in note 5.3.2. Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Transactions Sales of goods and services 17 344 15 353 240 016 16 539 National departments 1 949 1 654 1 949 1 654 Public entities 10 030 8 764 9 936 8 736 Subsidiaries, associates and joint ventures 5 365 4 935 228 131 6 149 Government grant funding received for electrification National departments 1 910 3 059 1 910 3 059 Purchases of goods and services 6 661 28 186 320 690 42 592 Constitutional institutions – 12 – 12 National departments 2 081 1 807 2 081 1 807 Public entities1 1 081 23 579 (199) 22 344 Subsidiaries, associates and joint ventures 110 127 316 129 16 031 Eskom Pension and Provident Fund 3 389 2 661 2 679 2 398 Bad debts expense 2 4 2 4 National departments – 1 – 1 Public entities 2 1 2 1 Subsidiaries, associates and joint ventures – 2 – 2 Net fair value and foreign exchange loss Subsidiaries, associates and joint ventures – – 185 (4) Finance income 76 126 4 121 612 National departments 12 11 12 11 Public entities 64 115 59 115 Subsidiaries, associates and joint ventures – – 4 050 486 Finance cost 2 8 360 9 144 10 366 9 612 National departments 398 18 398 18 Public entities 7 791 8 895 7 791 8 895 Subsidiaries, associates and joint ventures – – 2 006 468 Eskom Pension and Provident Fund 171 231 171 231 Dividend income Subsidiaries, associates and joint ventures – – 102 888 Lease income 8 12 5 16 National departments – 1 – 1 Public entities 8 11 2 11 Subsidiaries, associates and joint ventures – – 3 4 Lease expenses 3 8 2 12 Public entities 3 8 – 8 Subsidiaries, associates and joint ventures – – 2 4 Environmental levy Public entities 7 273 6 817 7 270 6 817 1. The current year amount was reduced by R14.2 billion relating to SARS fuel levy rebates. 2. Bonds are bearer instruments and it is therefore unknown if the initial counterparty still holds the bonds. Transactions in the secondary market where Eskom is not the counterparty are therefore excluded. ABC 121 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 47. Related-party transactions and balances (continued) Group Company 2025 2024 2025 2024 Rm Rm Rm Rm Outstanding balances (due by related parties) Receivables and amounts owed by related parties 6 711 2 507 27 875 5 202 National departments 255 212 246 203 Public entities 5 979 1 899 4 034 1 598 Subsidiaries, associates and joint ventures 477 396 23 595 3 401 Payments made in advance Eskom subsidiaries – – 12 – Loans receivable Subsidiaries, associates and joint ventures1 – – 37 956 39 847 Total due by related parties 6 711 2 507 65 843 45 049 Cash and cash equivalents Public entities 16 643 – 16 643 – Net derivative asset held for risk management Subsidiaries, associates and joint ventures – – 31 – Outstanding balances (due to related parties) Debt securities and borrowings 125 308 121 892 151 359 130 755 Public entities 123 157 119 744 123 157 119 744 Subsidiaries, associates and joint ventures2 – – 26 051 8 863 Eskom Pension and Provident Fund 2 151 2 148 2 151 2 148 Loan from shareholder National departments 56 132 32 000 56 132 32 000 Payables and amounts owed to related parties 4 729 3 450 32 107 6 740 Constitutional institutions 7 9 7 – National departments 406 323 406 323 Public entities 3 950 2 791 3 870 2 674 Subsidiaries, associates and joint ventures 14 9 27 516 3 463 Eskom Pension and Provident Fund 352 318 308 280 Payments received in advance 1 169 1 760 1 262 1 773 National departments 1 169 1 760 1 169 1 760 Subsidiaries, associates and joint ventures – – 93 13 Total due to related parties 187 338 159 102 240 860 171 268 Equity Capital and reserves National departments 84 000 44 000 84 000 44 000 Commitments Eskom does not have any material commitments with its related parties. 1. The effective interest rate on the loans to subsidiaries was 8.12% (2024: 7.15%). 2. Refer to note 25 for the effective interest rate and maturity date relating to intercompany instruments. ABC 122 48. Events after the reporting date The following significant events occurred after 31 March 2025: Extension of the term of the board The term of the board has been extended to 30 November 2025. Changes in Exco Mr SM Scheppers served as interim chief executive officer of NTCSA effective from 1 July 2024 until his secondment ended 31 July 2025. Mr ML Bala group executive distribution was seconded to the role of interim chief executive officer for NTCSA effective from 1 August 2025. Ms A Mlambo was appointed as acting group executive distribution effective from 1 August 2025. Debt relief The Minister of Finance approved the conversion of R56 billion to equity on 11 June 2025. Shares to the value of R64 billion were issued on 6 August 2025. Payment arrangement with City of Johannesburg Eskom and the City of Johannesburg concluded a structured payment arrangement on 3 June 2025 for the settlement of R3.1 billion overdue debt over a four-year period. Interest will be suppressed for the duration of the payment arrangement subject to settlement of the current amount receivable. Municipal debt relief agreement and write-off National Treasury issued an amendment to the Municipal Finance Management Act, 56 of 2003, Circular No.124 on 13 August 2025 that allows for a municipality to catch up outstanding payments after the close of the write-off cycle. The write-off condition that municipalities need to pay the current account for 12 consecutive months is no longer applicable. National Treasury instructed Eskom on 24 June 2025, 7 August 2025 and 22 August 2025 to write-off one-third of the overdue ring-fenced debt in terms of the municipal debt relief programme for 10 municipalities to the value of R0.6 billion. Refer to note 5.1.1. Negotiated pricing agreements NERSA approved a six-year negotiated pricing agreement with effect from 1 April 2025 for Transalloys (Pty) Ltd in terms of the interim framework for long-term negotiated pricing policy. The agreement includes an upside sharing clause which meets the criteria for recognition of an embedded derivative in line with IFRS 9. Court rulings Kuyasa Mining arbitration award A final appeal judgement was issued in favour of Eskom on 2 July 2025 after Eskom lodged an appeal against an arbitration award granted on 27 February 2023 in favour of Kuyasa Mining (Pty) Ltd relating to a dispute arising from a coal supply agreement. The ruling set aside the initial arbitration award by dismissing the claim by Kuyasa Mining with costs. The provision of R870 million (including interest and legal fees) that was recognised at 31 March 2025 in respect of the arbitration award was reversed as an adjusting event after the reporting date. Framatome contractual dispute The High Court issued judgement on 17 July 2025 dismissing the court application by Eskom to set aside the adjudication decisions made between December 2022 and February 2023 against Eskom relating to the disputes with Framatome on the Koeberg steam generator replacement project and confirmed the validity of the adjudication outcome. There is no impact on the annual financial statements at 31 March 2025 because of the adverse ruling as Eskom complied with the adjudication outcome and settled all related payments in full by 31 March 2024. The disputes were subsequently referred for arbitration and were considered in June and July 2025. A decision on the arbitration is expected towards the end of 2026. Court review applications by Eskom against NERSA Revenue decision for 2015 to 2021 (MYPD 4) – R40.2 billion The decision by NERSA on 5 May 2025 for the settlement of the RCA decisions of R40.2 billion for 2015 to 2021 was endorsed through a court order on 9 May 2025. The recovery of the settlement amount will be determined by NERSA through their governance processes. Revenue decision for 2026 to 2028 (MYPD 6) – R54 billion Eskom submitted a court review application on 30 June 2025 to set aside the decision on the value of the generation regulatory asset base after NERSA published the reasons for the revenue decision in June 2025. NERSA approved a settlement of R54 billion on 8 August 2025 relating to Eskom’s court review application which was accepted by Eskom on 11 August 2025 and to be endorsed by a court order. This resulted in additional revenue recovery of R12 billion for 2027 and R23 billion for 2028 which will result in an estimated increase to 8.76% and 8.83% for 2027 and 2028 respectively in the standard tariff. The remaining recovery will be determined by NERSA following their governance processes. Plant performance Medupi power station unit 4 was returned to service on 6 July 2025 contributing 800MW to the national grid after the unit sustained significant damage from the explosion of its generator stator on 8 August 2021. Kusile unit 6 entered commercial operation on 29 September 2025, contributing an additional 799MW to the national grid. Sale of EFC disposal group The Sale of Business Agreement with African Bank Limited was signed on 2 April 2025 and the Eskom Support and Guarantee Agreement, Interim Services Agreement and Relationship Agreement were signed on 3 July 2025. Refer to note 23. ABC 123 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 49. Remuneration of directors and executives The background to the remuneration of directors and executives and an overview of the main provisions of the remuneration policy is included in the remuneration and benefits section in the integrated report. The details of the board (governing body) and executive management remuneration are included in this note for the period of time served on the board or as members of Exco during the period under review. The details regarding the appointments, resignations and other changes in roles of directors during the year are included in the directors’ report on page 12. 49.1 Executive directors and management The remuneration of the group chief executive and the chief financial officer (executive directors) and Exco members (executive management) are disclosed below. The members of Exco are regarded as Eskom’s prescribed officers. The group chief executive has a fixed-term contract. The chief financial officer and executive management have permanent contracts based on Eskom’s standard conditions of service, except for one member who was on a fixed-term contract until 30 June 2024 and another who is on a three-year fixed-term contract until 31 October 2027. The emoluments for the executive directors and management were as follows: Name Salary Short-term Other Total Cash value Total cash bonus payments remuneration earned, not value of earned yet paid remuneration R’000 R’000 R’000 R’000 R’000 R’000 2025 Executive directors 15 000 1 211 2 601 18 812 – 18 812 DL Marokane 9 000 765 1 963 11 728 – 11 728 C Cassim 6 000 446 638 7 084 – 7 084 Executive management 35 457 7 282 7 775 50 514 (5 989) 44 525 ML Bala 5 800 2 610 121 8 531 (2 179) 6 352 FS Burn1 2 293 – 64 2 357 – 2 357 RA Crookes2 1 750 – 37 1 787 – 1 787 NY Hadebe2 1 708 – 24 1 732 – 1 732 CB Hartley3 333 – 4 337 – 337 PB Mngomezulu2 1 708 – 32 1 740 – 1 740 RP Mnisi4 717 – 29 746 – 746 SJ Mthembu5 1 750 – 38 1 788 – 1 788 BJ Nxumalo 5 800 2 584 208 8 592 (2 153) 6 439 EM Pule6 1 174 – 6 412 7 586 – 7 586 J Sankar1 1 611 – 202 1 813 – 1 813 SM Scheppers 5 800 2 088 296 8 184 (1 657) 6 527 AE Seema7 1 367 – 34 1 401 – 1 401 NN Sithole1 1 070 – 12 1 082 – 1 082 V Tuku8 715 – 185 900 – 900 S Vezi9 153 – 44 197 – 197 LM de Villiers2 1 708 – 33 1 741 – 1 741 50 457 8 493 10 376 69 326 (5 989) 63 337 2024 Executive directors 8 877 – 299 9 176 – 9 176 DL Marokane 750 – 3 753 – 753 C Cassim 5 377 – 209 5 586 – 5 586 JM Buys 2 750 – 87 2 837 – 2 837 Executive management 25 345 – 2 566 27 911 – 27 911 JA Oberholzer 458 – 1 038 1 496 – 1 496 ML Bala 2 831 – 132 2 963 – 2 963 FS Burn 3 765 – 120 3 885 – 3 885 M Govender 775 – 180 955 – 955 D Jackson 238 – 10 248 – 248 W Madonsela 750 – 28 778 – 778 N Minyuku 258 – 107 365 – 365 S Nassiep 435 – 115 550 – 550 BJ Nxumalo 2 831 – 216 3 047 – 3 047 EM Pule 3 523 – 145 3 668 – 3 668 J Sankar 2 641 – 102 2 743 – 2 743 SM Scheppers 2 831 – 192 3 023 – 3 023 NN Sithole 1 148 – 13 1 161 – 1 161 V Tuku 2 861 – 168 3 029 – 3 029 34 222 – 2 865 37 087 – 37 087 Salaries Salaries consist of a guaranteed package that includes Eskom’s medical and pension fund contributions. No fees were paid to executives who serve on the boards of Eskom subsidiaries. 1. Member of Exco until 31 October 2024. 2. Member of Exco from 1 November 2024. 3. Member of Exco from 1 March 2025. 4. Member of Exco from 1 February 2025. 5. Member of Exco from 1 May 2024 until 31 October 2024. 6. Member of Exco until 31 July 2024. 7. Member of Exco from 1 December 2024. 8. Member of Exco until 30 June 2024. 9. Member of Exco until 30 April 2024. ABC 124 Other payments Other payments include accumulated leave paid out, sign-on bonuses, separation payments, long service awards and expenditure related to telephone, security services, operating vehicle, professional subscriptions as well as spouse funeral and dreaded disease cover. Bonuses Short-term bonus The short-term incentive scheme was reinstated from 1 April 2024. Employees received a portion of the incentive payout in December 2024 after key performance targets were achieved for the first six months of the financial year. The balance was determined and paid after year end based on achievement of qualifiers and other key performance targets with the exception of the group chief executive officer and chief financial officer that is dependant on ministerial approval. The bonus provision disclosed in note 27 includes an estimated bonus payout for the executive directors and managers disclosed in this note. Long-term bonus Long-term incentive scheme The long-term performance incentive scheme rewards the Exco members in cash for meeting organisational objectives measured over a three-year period. Performance awards with a vesting period of three years from the date of grant were awarded to Exco members at the beginning of a financial year. The vesting of the performance awards are dependent on the scheme participant remaining employed by Eskom throughout the vesting period. The award lapses if employment ceases during the vesting period (other than for permitted reasons). The performance awards are linked to gatekeeper conditions and key performance indicators that are aligned with the Eskom Corporate Plan and shareholder compact and include both financial and non-financial targets. Awards only vest if the key performance indicator targets are met. Potential vesting percentages range from 0% to 100%. Each measure has a threshold and a stretch target with an expected (on target) vesting of 50%. The final vesting percentage is reduced with the corresponding weight of the vesting conditions should one or more of the conditions not be met. The vesting conditions are based on key performance indicators that include the following: • loadshedding • EBITDA • debt relief conditions • Just Energy Transition • audit findings on internal controls • unbundling The value of each performance award is deemed to be R1 at grant date and a money market rate is used to determine the value at reporting date. The award payment is recommended by the Human Capital and Remuneration Committee to the board for approval at the end of the vesting period. The board retains discretion to adjust the vesting percentages even if targets are met. The vesting values of the outstanding performance awards at 31 March 2025 and 31 March 2024 respectively were as follows: Name Awarded on 1 April 2024 (Grant 14) Awarded on 1 April 2023 (Grant 13) Outstanding Performance Performance Outstanding Performance Performance performance awards vesting awards payable performance awards vesting awards payable awards vesting on 31 March 2027 on 31 August 2027 awards vesting on 31 March 2026 on 31 August 2026 on 31 March 2027 at a rate of 50% at R1.27 per award on 31 March 2026 at a rate of 50% at R1.31 per award Number Number R'000 Number Number R'000 DL Marokane 18 000 000 9 000 000 11 430 – – – C Cassim 6 000 000 3 000 000 3 810 6 000 000 3 000 000 3 930 ML Bala 3 397 170 1 698 585 2 157 3 397 170 1 698 585 2 225 BJ Nxumalo 3 397 170 1 698 585 2 157 3 397 170 1 698 585 2 225 SM Scheppers 3 397 170 1 698 585 2 157 3 397 170 1 698 585 2 225 34 191 510 17 095 755 21 711 16 191 510 8 095 755 10 605 Reconciliation of performance awards movements of long-term incentive plan 2025 2024 Number Number Outstanding at beginning of the year 16 191 510 – Granted during the year 34 191 510 16 191 510 Forfeited during the year1 – – Outstanding at end of the year 50 383 020 16 191 510 Carrying amount of liability (R'000) 28 089 8 793 Housing loans Housing loans to Exco members were as follows: 2025 2024 R’000 R’000 C Cassim 2 663 2 792 ML Bala 2 266 2 358 DL Marokane 7 868 – J Sankar – 3 204 NN Sithole – 101 12 797 8 455 Home loan balances are disclosed when an individual is in the role of an executive director or management at financial year end. The interest rate on the loans from EFC at 31 March 2025 was 9.25% (2024: 10%). The loans are repayable over a maximum period of 30 years. The terms and conditions applicable to ex-employees are applied on resignation. 1. Performance awards (3 522 660 awards) were awarded to EM Pule on 1 April 2023 and forfeited on 31 July 2024 when she retired from Eskom. ABC 125 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 49. Directors’ and executives’ remuneration (continued) 49.2 Non-executive directors Non-executive directors were previously paid a fixed monthly fee and were reimbursed for out-of-pocket expenses incurred in fulfilling their duties. This was revised in 2024 and approved by the shareholder representative where the non-executives now receive compensation through a fixed monthly retainer fee and a per-meeting attendance fee that is capped based on the meeting calendar approved by the shareholder. Payments are made on a quarterly basis. The fees for the year were as follows: 2025 2024 R’000 R’000 M Nyati 2 724 1 358 PM Makwana – 933 RDB Crompton – 676 FBB Abdul Gany 2 352 1 081 LL Goqwana 1 775 754 CR le Roux 2 237 1 061 APZ Mafuleka 1 832 820 L Mkhabela 1 832 823 TL Mthombeni 1 832 849 B Ntshalintshali 1 775 873 T Ramano 2 006 1 018 CB Vilakazi 1 832 881 C Von Eck 2 199 1 058 22 396 12 185 The following board members serve as directors on the board of subsidiary companies. Fees for the year for the attendance of meetings were as follows: Escap SOC Ltd1 APZ Mafuleka 2 188 – L Mkhabela3 130 – 318 – National Transmission Company South Africa SOC Ltd4 CB Vilakazi 1 104 – T Ramano 1 073 – 2 177 – 1. Fees paid directly to board member. 2. Appointed 8 October 2024. 3. Appointed 5 September 2024. 4. Fees paid by Eskom. ABC 126 50. New standards and interpretations 50.1 Standards, interpretations and amendments to published standards that are not yet effective The following new standards, interpretations and amendments to existing standards have been published that are applicable for future accounting periods that have not been adopted early by the group. These standards and interpretations will be applied in the first year that they are applicable to the group which is the financial period beginning on or after the effective date. Topic Summary of requirements Impact Lack of exchangeability – The amendments specify how to assess whether a currency is exchangeable and No impact on the group as all amendments to IAS 21 The how to determine the exchange rate when it is not. The amendments clarify: foreign currency transactions Effects of Changes in Foreign • when a currency is exchangeable into another currency are exchangeable. Exchange Rates • how a company estimates a spot rate when a currency lacks exchangeability (1 January 2025) • the disclosure requirements for users to understand the impact of the currency not being exchangeable These amendments have to be applied prospectively. Classification and The amendments specify: No impact on the group as measurement of financial • when a financial liability settled through an electronic payment system can be f inancial liabilities are instruments – amendments deemed to be discharged before the settlement date derecognised on settlement to IFRS 9 and IFRS 7 • how to assess the contractual cash flow characteristics of financial assets with date and there are no equity (1 January 2026) contingent features when the nature of the contingent event does not relate instruments designated at fair directly to changes in basic lending risks and costs value through other • new or amended disclosure requirements relating to investments in equity comprehensive income or instruments designated at fair value through other comprehensive income and f inancial assets with financial instruments with contingent features that do not relate directly to basic contingent features. lending risks and costs These amendments have to be applied prospectively. Contracts referencing The amendments provide guidance on: No impact on the group as nature-dependent electricity • the own-use exemption for purchasers of electricity under such power purchase existing power purchase – amendments to IFRS 9 agreements agreements are for own use and IFRS 7 • hedge accounting requirements for companies that hedge their purchases or and not designated for hedge (1 January 2026) sales of electricity using power purchase agreements accounting. • new disclosure requirements relating to contracts for nature-dependent electricity with specified characteristics These amendments have to be applied prospectively. Annual improvements The amendments include the following: The amendments are not volume 11 – amendments to • IFRS 1: clarifies hedge accounting wording inconsistencies with IFRS 9 expected to have a material IFRS 1 First-time Adoption of • IFRS 7: aligns the terminology and concepts with IFRS 13 Fair Value Measurement impact on the group and will International Financial and updates the implementation guidance to simplify aspects of the requirements be adopted as required if Reporting Standards, that are not illustrated applicable. IFRS 7, IFRS 9, IFRS 10 • IFRS 9: updates cross-references for derecognition of lease liabilities and aligns Consolidated Financial terminology with IFRS 15 Statements and IAS 7 • IFRS 10: clarifies inconsistencies relating to judgement when determining whether Statement of Cash Flows a party is acting as a de facto agent (1 January 2026) • IAS 7: replaces 'cost method' with 'at cost' for consistency with IFRS Accounting Standards These amendments have to be applied retrospectively. IFRS 18 Presentation and IFRS 18 will replace IAS 1 while carrying forward many of the requirements in IAS 1 The group is assessing the Disclosure in Financial and introduces new requirements relating to: impact of these presentation Statements • presentation of specified categories and defined subtotals in the statement of requirements and will be (1 January 2027) profit or loss adopted as required. • disclosures on management-defined performance measures in the notes to the financial statements • improved aggregation and disaggregation Some of the requirements in IAS 1 moved to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7. Sale or contribution of The amendments address the conflict between the guidance on consolidation and No impact as the group is assets between an investor equity accounting when a parent loses control of a subsidiary in a transaction with currently not disposing of any and its associate or joint an associate or joint venture. The amendments require that the full gain be investments in associates or venture – amendments to recognised when the assets transferred meet the definition of a business under joint ventures. IFRS 10 and IAS 28 IFRS 3. Investments in Associates and Joint Ventures (optional adoption, effective date deferred indefinitely) ABC 127 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 50. New standards and interpretations (continued) 50.2 Standards, interpretations and amendments to published standards that are effective and applicable to the group Topic Summary of requirements Impact Supplier finance The amendments introduce additional disclosure No impact as there are currently no supplier finance arrangements – amendments requirements for companies that enter into supplier arrangements. to IAS 7 and IFRS 7 finance arrangements. (1 January 2024) The amendment to IAS 7 describes the characteristics of a supplier finance arrangement and requires entities to provide qualitative and quantitative information about its supplier finance arrangements. The amendment to IFRS 7 added supplier finance arrangements as an example within the requirements to disclose information about an entity’s exposure to concentration of liquidity risk. These amendments have to be applied retrospectively. Lease liability in a sale and The amendments impact how a seller-lessee accounts for No impact as there are currently no sale and leaseback leaseback – amendment to variable lease payments that arise in a sale and leaseback transactions. IFRS 16 transaction by specifying that a seller-lessee measures the (1 January 2024) lease liability arising from a sale and leaseback transaction in such a way that it does not recognise any amount of the gain or loss that relates to the retained right-of-use asset. These amendments have to be applied retrospectively. Classification of liabilities as The amendments clarify the requirements of determining No material impact as the group could defer current or non-current and if a liability is current or non-current including: settlement at the reporting date. The classification of non-current liabilities with • what is meant by a right to defer settlement liabilities remained unchanged. covenants – amendments to • that a right to defer must exist at the end of the IAS 1 Presentation of Financial Refer to note 5.3.2 for details regarding loan reporting period covenants. Statements • that classification is unaffected by the likelihood that an (1 January 2024) entity will exercise its deferral right • that only if an embedded derivative in a convertible liability is itself an equity instrument would the terms of a liability not impact its classification These amendments have to be applied retrospectively. ABC 128 51. Information required by the Public Finance Management Act Section 55(2)(b)(i) of the PFMA requires that the particulars of any irregular expenditure, any fruitless and wasteful expenditure as well as material losses due to criminal conduct be disclosed in the annual financial statements and annual report (integrated report). The National Treasury Instruction 4 of 2022/23 on the PFMA Compliance and Reporting Framework was applied in this regard when compiling the disclosure in the annual financial statements and integrated report. The instruction applies to all departments, trading entities, constitutional institutions and public entities listed in Schedules 2 and 3 to the PFMA. The instruction requires that detailed information be reported in the integrated report and only expenditure relating to the current and comparative financial years be reported in the annual financial statements. The instruction note further requires reporting inclusive of VAT. However, National Treasury has granted Eskom a departure from this requirement in terms of section 79 of the PFMA. Eskom has historically reported all amounts excluding VAT and has continued to do so for the 2025 financial year therefore, all amounts disclosed in this note exclude VAT. In addition to the annual disclosure provided in the financial statements and integrated report, the group reports quarterly to National Treasury on current and historical irregular expenditure and fruitless and wasteful expenditure that has not been fully addressed as required. 51.1 Irregular expenditure Irregular expenditure is defined as expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation. The scope includes transgressions of any laws and regulations regardless of whether or not the expenditure was justified from a business perspective, value was received, the breaches were deliberate or accidental or the breaches happened unknowingly or in good faith. Irregular expenditure is incurred when the related transaction is recognised in terms of IFRS Accounting Standards. The irregular expenditure is eliminated from the cumulative balance disclosed in the integrated report through a process of condonation by the relevant authority, removal, recovery or write-off. 2025 2024 Current Previously Prior year Restated year reported error Note Rm Rm Rm Rm Group PFMA 711 1 159 354 1 513 Use of sole source (a) 1 12 (10) 2 Tender processes not adhered to and insufficient delegation of authority (b) 708 1 130 364 1 494 Modifications exceeding allowed amounts (c) 2 17 – 17 PPPFA 190 239 218 457 Tax non-compliance (d) 183 239 200 439 Designated sectors (e) 7 – 18 18 CIDB regulations Contracts awarded without following CIDB requirements (f ) – 15 – 15 Various commercial requirements Breach of more than one legislative requirement (g) 561 3 272 295 3 567 Other 75 53 21 74 1 537 4 738 888 5 626 Company PFMA 583 764 312 1 076 Use of sole source (a) 1 – 2 2 Tender processes not adhered to and insufficient delegation of authority (b) 580 747 310 1 057 Modifications exceeding allowed amounts (c) 2 17 – 17 PPPFA 190 116 248 364 Tax non-compliance (d) 183 116 230 346 Designated sectors (e) 7 – 18 18 CIDB regulations Contracts awarded without following CIDB requirements (f ) – 2 – 2 Various commercial requirements Breach of more than one legislative requirement (g) 425 3 267 269 3 536 Other 75 – 21 21 1 273 4 149 850 4 999 (a) Use of sole source Expenditure was incurred on awards which did not meet the National Treasury requirements for limited bidding where awards were incorrectly allocated to predetermined suppliers. Sole source requests are scrutinised to confirm compliance with criteria before approval through the relevant governance processes. The requirement to obtain National Treasury approval for these transactions has since been repealed through the PFMA Supply Chain Management National Treasury Instruction No. 3 of 2021/22, effective 1 April 2022. There was a recategorisation from the use of sole source category to the breach of more than one legislative requirement category, for continuing expenditure of R12 million incurred in the 2024 financial year on non-compliant contracts that were incorrectly categorised in prior years by ERI. ABC 129 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 51. Information required by the Public Finance Management Act (continued) 51.1 Irregular expenditure (continued) (b) Tender processes not adhered to and insufficient delegation of authority Irregular expenditure was incurred where incorrect tender processes were followed in a manner that was not deemed fair, equitable, transparent, competitive and cost-effective and/or the transactions were executed without appropriate approvals. (c) Modifications exceeding allowed amounts National Treasury required that their approval be obtained for any modification made during 1 May 2016 to 1 April 2022 to an original contract where the value of the modification was more than 20% or R20 million for construction-related goods, works or services and 15% or R15 million for all other goods or services. The group did not initially comply with this requirement, predominantly due to a misinterpretation of Instruction Note 3 of 2016/17. The requirement to obtain National Treasury approval for these transactions has since been repealed through the PFMA Supply Chain Management National Treasury Instruction No. 3. Expansions and variations of contracts are reported to National Treasury on a monthly basis. (d) Tax non-compliance The Preferential Procurement Policy Framework Act, 5 of 2000 (PPPFA) regulations stipulate that suppliers must be compliant with SARS regulations. Internal processes require that the tax status of all successful tenderers is confirmed to be compliant prior to concluding a contract. This continues to be a focus area. (e) Designated sectors Where local production and content is of critical importance in the award of tenders in designated sectors, such tenders must be advertised with a specific tendering condition that only locally produced goods, services or works or locally manufactured goods that meet the stipulated minimum threshold for local production and content will be considered. Contracts were awarded to suppliers despite having declared a local content threshold that was below the required stipulated threshold as per the Department of Trade and Industry list of designated materials. Internal processes make it mandatory for commercial practitioners to indicate whether the transaction has designated elements or not. (f) Contracts awarded without following CIDB requirements The group did not always comply with the Construction Industry Development Board (CIDB) regulations regarding the advertising of tenders, grading of contractors and publishing of awards. (g) Breach of more than one legislative requirement Transgression of more than one legislative requirement was identified in certain instances. Continuous improvements are made to processes to address breaches. There was a recategorisation from the use of sole source category to the breach of more than one legislative requirement category, for continuing expenditure of R12 million incurred in 2024 on non-compliant contracts that were incorrectly categorised in prior years by ERI. 51.2 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is expenditure made in vain that could have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is reported in the annual financial statements when it is confirmed. 2025 2024 Current Previously Prior year Restated year reported error Rm Rm Rm Rm Group Procurement and contract management – – 2 2 Interest and penalties 8 – – – Other 12 1 10 11 20 1 12 13 Company Procurement and contract management – – 2 2 Other 12 1 8 9 12 1 10 11 The group experienced 37 (2024: 46 restated) and the company 23 (2024: 18 restated) incidents of fruitless and wasteful expenditure during the year. ABC 130 51.3 Criminal conduct Material losses caused by criminal conduct and any disciplinary, civil or criminal action taken in respect of such losses are reported in terms of the significance and materiality framework as agreed upon with the shareholder representative. Incidents that exceeded the materiality threshold individually or as a type of closely related items are disclosed. Group Company Note 2025 2024 2025 2024 Losses incurred (Rm) Estimated non-technical energy losses (a) 7 068 6 441 7 068 6 441 Theft of conductors, cabling and network-related equipment (b) 77 120 64 120 Malicious damage to property (b) 77 67 75 67 Fraud and corruption (c) 4 64 4 64 Common theft (b) – 26 – 14 7 226 6 718 7 211 6 706 Losses recovered (Rm) Estimated non-technical energy losses (a) 324 229 324 229 Theft of conductors, cabling and network-related equipment (b) 5 3 2 3 Malicious damage to property (b) 2 13 2 13 Fraud and corruption (c) 2 1 2 1 Common theft (b) – 2 – 2 333 248 330 248 Number of criminal incidents where direct financial losses were incurred Theft of conductors, cabling and network-related equipment (b) 1 585 2 380 1 425 2 379 Malicious damage to property (b) 261 238 177 238 Fraud and corruption (c) 4 2 4 2 Common theft (b) – 274 – 246 1 850 2 894 1 606 2 865 Number of arrests Estimated non-technical energy losses (d) 7 12 7 12 Theft of conductors, cabling and network-related equipment (d) 73 126 66 126 Malicious damage to property (d) 16 10 14 10 Fraud and corruption (d) – 2 – 2 Common theft (d) – 31 – 31 96 181 87 181 (a) Estimated non-technical energy losses Non-technical energy losses relate to losses due to electricity theft through illegal connections, tampering and bypassing of electricity meters as well as the purchase of electricity tokens from unregistered or illegal vendors. The management of non-technical losses focuses on ensuring that all energy supplied is accounted including initiatives to minimise non-technical energy losses. Non-technical energy losses are determined by applying a scientific approach to measure total energy losses as the difference between energy produced and energy sold. Technical energy losses are derived based on known factors of the electrical grid such as conductor resistance, transformer and equipment losses. The residual of losses is attributed to non-technical losses and occur over a 24-hour period and is therefore seen to be baseload (coal-fired) orientated as the power stations are designed to respond to consumption patterns. The measurement of losses is therefore based on the variable cost of coal-fired stations that include coal and water usage as well as environmental levy costs. Other coal production costs are excluded as they are not directly related to energy sent out. The production cost of peaking plant, including OCGTs, are excluded as they are normally only operated during periods of peak demand. The reported losses represent the estimated cost of non-technical energy lost. Total energy losses were as follows: 2025 2024 % GWh % GWh Technical 2.86 5 644 2.71 5 242 Non-technical 7.55 14 881 7.21 13 924 Eskom invoiced R407 million (2024: R307 million) of revenue relating to non-technical energy losses during the year, of which R324 million (2024: R229 million) has been received. The risk that non-technical energy losses could increase in the future because of the investigations that uncovered the bulk generation of illegal prepaid tokens on Eskom’s online vending system in 2024 reduced as improvements were implemented in the online vending environment during the year. Refer to note 45.2. ABC 131 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 51. Information required by the Public Finance Management Act (continued) 51.3 Criminal conduct (continued) (b) Theft of network-related equipment, malicious damage to property and common theft Theft of network-related equipment includes theft of cable (including airdac cable), batteries, tower members and transformers. Unlawful and intentional damage to property belonging to another is reported as malicious damage to property. Vandalism is the action involving deliberate destruction of or damage to public or private property. Damage towards any property without permission of the owner is reported as vandalism. Common theft consists of the unlawful appropriation of moveable property belonging to another with intent to deprive the owner permanently of the property. Property includes laptops, tools, cell phones, equipment, air-conditioners and all other items not included in the Eskom list of essential infrastructure or security crime categories. The losses incurred in this category were below the materiality threshold in 2025. Actions to combat losses through criminal conduct are managed in collaboration with other affected state-owned companies, industry role players, the National Prosecuting Authority and SAPS, including: • realigning of security contracts (scope and resources) and optimisation of deployment • improving of the Eskom asset disposal process and strategies • focusing on asset management and protection - researching and implementation of innovative solutions, ie unique marking and tracking capabilities • implementing policy and legislative changes to address scrap and market regulation • introducing integrated, intelligent and smart security technologies and systems to reduce dependence on the human factor such as use of drones, intelligent cameras and alarm systems • implementing focused strategies and projects on revenue losses - metering, vending, tampering, disruptive operations, etc. • minimising breaches that allow easy access to sites and assets by improving housekeeping, appropriate storing of material and equipment with well- functioning delay and deterring solutions to prevent or minimise impact • deploying robust security systems that can detect and prevent crime and provide evidence that can be used for disciplinary or criminal processes • ensuring consistent and continuous screening and vetting of contractors and staff to prevent and minimise insider threat involvement and collusion • making arrests and working with relevant role players to build strong cases and dockets leading to convictions (c) Fraud and corruption Eskom concluded 4 (2024: 21 restated) investigations into fraud during the year where losses due to criminal conduct were incurred. The number of incidents for 2024 was restated from 26 to 21 due to the correction of an error in the previous financial year. The internal control measures in the affected areas have been reviewed and enhancements recommended to the accountable line managers for implementation. This includes controls, disciplinary, criminal and civil proceedings against those involved. (d) Number of arrests The number of arrests reported for 2024 has been restated due to a change in the methodology of calculating the supporting information for material losses due to criminal conduct. The numbers included in the prior year included matters where there were no direct losses incurred. Group and company Disclosed Adjustment Restated Estimated non-technical energy losses 22 (10) 12 Theft of conductors, cabling and network-related equipment 130 (4) 126 Malicious damage to property 12 (2) 10 Fraud and corruption 7 (5) 2 Common theft 35 (4) 31 206 (25) 181 ABC 132 52. Reportable irregularities and matters under investigation 52.1 Reportable irregularities The external auditors raised certain reportable irregularities in terms of section 45 of the Auditing Profession Act, 26 of 2005. Progress was made in clearing these reportable irregularities. The table below reflects the status of the reportable irregularities at 31 March 2025. The discussion focused on items that were open at the previous year end and new items identified in the current year. Description Response Status 1. Eskom failed to effect corrective • The continued implementation of the emission reduction strategy has led to a significant Open, pending actions for identified non- improvement in the condition and reliability of the coal-fired power stations. implementation compliance to NEMA, National • An integrated approach, consisting of improved governance, performance management, of action items Water Act, 36 of 1998 (NWA) skills development and detailed operational plans, has been instituted to address risks and National Environmental and root causes of incidents leading to environmental non-compliance. Management: Air Quality Act, 39 • Incidents of non-compliance are reported to the authorities and investigations are of 2004 (NEM: AQA) at multiple undertaken to ensure that appropriate corrective and preventative measures are put power stations, specifically the in place. The risks relating to the non-compliances are appropriately reported and following: tracked at the relevant management and committee levels. Progress of all open actions • section 30 and 31L of NEMA is tracked per power station and reported internally and to the relevant authorities. • section 19, 20, 21, 22, 53, 118, • No criminal charges have been received following the referral for criminal investigation 120 and 121 of NWA at Tutuka power station. The matters raised in the compliance notice (water use licence • section 51(1)(e) of audit findings) are being addressed and progress has been made with addressing the NEM: AQA root causes of non-compliance. A key action includes the amendment of the water use licence which was submitted to the Department of Water and Sanitation in Notices have been levied by September 2023. Continuous engagements are taking place with the Department of the authorities for some of Water and Sanitation around the delays to finalise the amendments to the water use these non-compliances, licence. resulting in a risk of sanctions • The implementation of actions in response to the generation division strategic water from the authorities as well as implementation plan, which aims to address the root causes that resulted in unlawful referral to the National water overflows, continues. Progress is reported at the relevant management and Prosecuting Authority for committee levels. criminal investigation. • The criminal case against Eskom in respect of the atmospheric emission licence non- These breaches lead the compliance at Kendal power station between April 2015 and April 2019 was heard auditors to believe the non- in court on 20 to 22 November 2024. The case was dismissed on 6 January 2025 compliance with NEMA, NWA as the state failed to provide sufficient evidence that the power station operated and NEM:AQA represents above its licenced stack emission limits during deemed normal operating conditions. material breaches of the The remission reduction plan for Kendal power station which focusses on improving fiduciary duties of the directors dust handling plant performance was revised during November 2024. Implementation of the company. is tracked through the generation recovery system. Reported: 2021–2025 • The implementation of an air quality plan continues that include key objectives to: – Minimise the impact of Eskom’s emissions on human health and the natural environment. – Maintain Eskom's licence to operate by ensuring compliance with air quality legislation, including power station atmospheric emission licences and minimum emission standards. – Minimise financial and legal liabilities associated with emissions and non-compliance to legislation. – Support Eskom's Just Energy Transition with regards to a transition from the existing dependence on fossil fuels towards a mix of energy sources for electricity generation. ABC 133 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 52. Reportable irregularities and matters under investigation (continued) 52.1 Reportable irregularities (continued) Description Response Status 2. Certain duties relating to investigations • All investigations which reveal suspicions of fraud and corruption are referred Open, pending have not been fulfilled including: to the Directorate for Priority Crime Investigation PRECCA office. The finalisation of • Contravention with the requirements PRECCA reference number has been included in the forensic investigation forensic backlog of National Treasury regulation reports. and disciplinary section 33.1.2 as there were delays • The group investigation and security division was established in October 2024 inquiries within the investigative functions to enhance and centralise the forensic investigation function. of the organisation in initiating and • The forensic staff headcount is being increased to address the delay in initiating finalising forensic investigations and finalising investigations and enable a quicker response to identified and allegations of misconduct of incidents of fraud, corruption and financial irregularities. individuals in key roles. • Increased use of the forensic panel to assist with addressing the backlog in • Management did not meet its forensic cases. fiduciary duty requirements as delays • Establishment of a rapid response team and appointment of a service provider in investigations will impact Eskom’s to assist with speedy resolution of priority forensic investigations. ability to mitigate any possible future • The project management office has committed to assist forensic with report exposures to financial losses and reviews. effective consequence management. • A key performance indicator has been implemented which makes it a • The accounting authority was, requirement for investigations to commence within 60 calendar days of as a result, not in a position to completion of preliminary assessments. This measure is effective from confirm that all relevant matters are 1 April 2025. reported in terms of section 34(1) of the Prevention and Combating of • The current case management system is being replaced to enhance efficiency. Corrupt Activities Act, 12 of 2004 • Processes and relationships with law enforcement agencies have been (PRECCA). strengthened. Reported: 2022–2025 3. Certain financial records were not • Management acknowledged that there are internal control deficiencies in Open, pending complete or accurately maintained in line the PFMA reporting process and continue to take steps as a key focus area addressing of with legislative requirements of the to strengthen governance, improve processes and procedures, enhance PFMA reporting PFMA and Companies Act, including: compliance with relevant regulations and foster a culture of accountability and challenges • An effective system of internal transparency within the organisation. controls was not implemented • All procurement documentation has been centrally loaded to review to ensure that registers used for completeness. Progress, limitations and solutions were monitored on a weekly disclosure in the annual financial basis and progress reports provided to Exco, audit committee and board. statements were accurate and • Ongoing oversight by Exco through the Eskom audit recovery programme to complete with full and proper track and escalate PFMA reporting and disclosure deficiencies with quarterly supporting records. PFMA reporting to National Treasury. • Certain information could not be • The current year procurement transactions were reviewed for completeness provided by management to the and compliance gaps that required intervention. A self-declaration process auditors which resulted in scope was implemented (where information was not available) to ensure staff limitations. accountability. Policies are being updated to embed the self-declaration • Multiple non-compliances of PFMA process and enforce monthly completeness reporting. (section 51 and 55) and the Companies • The irregular expenditure register was enhanced by including identified Act (section 28 and 29). potential irregular expenditure through initial assessments. This resulted in • The inaccurate and incomplete additional instances of possible irregular expenditure, both relating to current financial record keeping is a material and prior periods. breach of the fiduciary duties of • Irregular expenditure opening balances will be assessed in detail to close out management. matters and submit for condonation. Reported: 2022–2025 • A framework for all tenders above R300 million has been developed and approved to assist with proactive assurance reviews. • The irregular expenditure process has been documented in a position paper that highlights the complexities relating to the nature and extent of the work to be carried out by the business. ABC 134 Description Response Status 4. Investigations into alleged financial • Consequence management is a key component of the audit recovery Open, pending misconduct relating to instances of programme. A focus area is to strengthen the culture around accountability implementation irregular, fruitless and wasteful and implementation of effective policies as well as responding consistently and of improvements expenditure and performing the fairly to incidences of non-compliance regardless of the position or status of an necessary disciplinary procedures and employee within the organisation. consequence management was not done • Capacity constraints in the PFMA and loss control function departments are timeously in line with the PFMA (sections being addressed. Recruitment processes and the appointment of consultants 51(1)(e)(iii),55(1)(a), 83(1), (2), (3) and (4)) are in progress. The first phase of the recruitment drive has been completed and related treasury regulations and appointment letters issued with effect from 1 April 2025 with the second (paragraph 31.1). This includes: phase underway. • Conducting investigations into • The loss control function department was restructured to ensure improved instances of irregular and fruitless and efficiency and use of resources with enhanced independence of reporting for wasteful expenditure to determine if business reliance and management action. disciplinary steps needed to be taken • A consequence management tracker was implemented to monitor all incidents against liable officials. with progress reported to Exco and relevant board committees to ensure • Taking disciplinary actions against any accountability and compliance. official(s) who made or permitted • Various matters where fraud, theft and other related losses have been irregular and fruitless and wasteful identified are being investigated by the SIU and forensic investigators. expenditure based on the outcome • Revised disciplinary procedures are being implemented with ongoing of investigations. awareness initiatives and training sessions. • Providing supporting documentation • A panel of external case disciplinary chairpersons and case presenters is to confirm that disciplinary steps were available to assist with disciplinary procedures. Internal capacity is enhanced taken against all the officials who made through training of employees to serve as case chairpersons and case or permitted irregular and fruitless presenters. and wasteful expenditure based on the outcome of investigations. • Quarterly reporting is done on the status of PFMA cases to enhance monitoring and escalation. Financial misconduct reports are presented quarterly to Exco • Providing supporting documentation with an annual report submitted to the AGSA and National Treasury. to confirm that recommendations of completed disciplinary hearings were • Evaluation of technological solutions to enable automation and flagging of non- implemented. compliance. • Initiate all investigations into alleged financial misconduct within 30 days of the incidents being reported. Reported: 2022–2025 5. Management did not discharge their • It has been challenging in recent years for Eskom to meet the deadline for Open, pending fiduciary duty as they failed to ensure complete and accurate draft annual financial statements by the end of May due implementation that the entity’s complete and accurate to the size and complexity of the group’s operations, as well as the material of improvements financial statements were submitted to risks and challenges that Eskom is facing, including the impact of ongoing National Treasury and the auditors on investigations into the challenge of criminality. 30 May 2025, as required by PFMA • The extent and effort to address the PFMA reporting challenges also impacts section 55. The same matter was on the practicality of meeting the May reporting deadline. identified in prior years which highlights • Additional financially skilled resources are required to deal with the complex that there are failures within the financial and stressful challenges of Eskom’s current operating environment. The need reporting controls which have not been for identified additional financial resources will be addressed, particularly rectified and put in place as required by expert technical and process control monitoring skills, through the Eskom PFMA section 51. audit recovery programme. Reported: 2022–2025 • The finance business partnering matrix will be improved and aligned. • Review and discipline around reporting will be strengthened to ensure timeous and complete submissions, including improved month end processes and an enhanced focused hard-close before year end. • Key performance indicators on the quality and timeliness of monthly reporting have been incorporated into the performance compacts of group executives to strengthen accountability. • The corporate planning and budgeting process is being enhanced to ensure earlier approval to enable timely completion of year end reporting key deliverables that are dependent on this process such as going concern and impairment assessments. • Periodic independent reviews and internal audit validations are being conducted on key reporting processes to verify accuracy, completeness and reliability of financial information before external audit review. • Ongoing training programmes are being implemented for finance staff to strengthen their knowledge of PFMA requirements, IFRS Accounting Standards and emerging reporting expectations. ABC 135 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Notes to the financial statements continued 52. Reportable irregularities and matters under investigation (continued) 52.1 Reportable irregularities (continued) Description Response Status 6. Management has not complied with • The incorrect reporting in past submissions has been investigated. The process Closed section 17(2) of the Powers, Privileges was impacted by the short notice and turnaround period of information and Immunities of Parliaments and requests, even though the submitted information was clearly indicated as Provincial Legislatures Act, 4 of 2004 being based on draft information at the time of submitting. regarding misleading information • A register and history of submitted information have been implemented. provided to the Standing Committee on • Information with supporting evidence is signed off by the relevant divisional Public Accounts (SCOPA). Management and group management before submission. omit ted to cor rec t the • Information is reviewed for accuracy by internal audit before submission. misrepresentations made. • Eskom shareholder representative submitted feedback to SCOPA regarding Reported: 2023 the incorrect reporting. 7. Certain prescribed officers of the group • The standard offer programme and emergency generation programme were Closed have not complied with section 76 (3)(c) approved by the board investment and finance committee subject to the of the Companies Act resulting in a fulfilment of certain conditions which transmission management confirmed material breach in fiduciary duty and a at the time were concluded. The gap occurred during implementation where potential material financial loss to the due processes were not fulfilled. entity. This includes: • A reconciliation agreement has been concluded and recovery of revenue is • A standard offer programme underway with a substantial amount already recovered. contract was concluded without • The necessary consequence management actions were finalised. a reconciliation agreement. This resulted in only the supply side of the contract being in effect, with no allowance for the billing of revenue. The contract lacks commercial substance. • The contract was changed to an emergency generation programme contract at less favourable conditions to the group without an addendum to the end user distributor agreement and therefore revenue could still not be recovered. Reported: 2024 52.2 Matters under investigation There are currently various internal and external investigations being conducted into alleged fraud and malfeasance by current and former Eskom employees as well as external parties. Eskom is working with relevant authorities regarding these matters. ABC 136 Appendix – abbreviations, acronyms and definitions Accounting, audit and other financial terms CAPEX Capital expenditure CGU Cash Generating Unit DRC Depreciated Replacement Cost EAR rule Enhanced Auditor Reporting for the Audit of Financial Statements of Public Interest Entities EBITDA Profit before depreciation and amortisation expense and net fair value and foreign exchange (loss)/gain ECL Expected Credit Loss IAS® International Accounting Standard/(s) IFRIC® International Financial Reporting Interpretations Committee IFRS® Accounting Standards International Financial Reporting Standards as issued by the International Accounting Standards Board IRBA Independent Regulatory Board for Auditors ISA International Standards on Auditing PPI Producer Price Index R Rand Rm Rand millions VAT Value Added Tax Accounting standards and interpretations IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 12 Income Taxes IAS 16 Property, Plant and Equipment IAS 19 Employee Benefits IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 28 Investments in Associates and Joint Ventures IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 39 Financial Instruments: Recognition and Measurement IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 18 Transfers of Assets from Customers IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 3 Business Combinations IFRS 5 Non-current Assets Held-for-Sale and Discontinued Operations IFRS 7 Financial Instruments: Disclosures IFRS 8 Operating Segments IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 13 Fair Value Measurement IFRS 15 Revenue from Contracts with Customers IFRS 16 Leases IFRS 17 Insurance Contracts IFRS 18 Presentation and Disclosure in Financial Statements IFRS practice statement 2 Making Materiality Judgements Currencies CNY Chinese yuan EUR Euro GBP Pound sterling (United Kingdom) JPY Japanese yen NOK Norwegian krone SEK Swedish krona USD United States dollar ZAR South African rand Entities EFC Eskom Finance Company SOC Ltd EPPF Eskom Pension and Provident Fund Escap Escap SOC Ltd Eskom Eskom Holdings SOC Ltd Group Eskom Holdings SOC Ltd and its subsidiaries Motraco Mozambique Transmission Company SARL NEDCSA National Electricity Distribution Company of South Africa SOC Ltd NTCSA National Transmission Company South Africa SOC Ltd Nqaba Nqaba Finance 1 (RF) Ltd ERI Eskom Rotek Industries SOC Ltd ABC 137 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Appendix – abbreviations, acronyms and definitions continued Legislation Companies Act Companies Act, 71 of 2008 King IV TM Report on Corporate Governance for South Africa NEMA National Environmental Management Act, 107 of 1998 NWA National Water Act, 36 of 1998 NEM: AQA National Environment Management: Air Quality Act, 39 of 2004 PAA Public Audit Act, 25 of 2004 PFMA Public Finance Management Act, 1 of 1999 PPPFA Preferential Procurement Policy Framework Act, 5 of 2000 PRECCA Prevention and Combating of Corrupt Activities Act, 12 of 2004 Measures GWh Gigawatt hour kg Kilogram km Kilometre kWh Kilowatt hour kWhSO Kilowatt hour Sent Out ℓ Litre MVA Mega volt ampere MW Megawatt MWh Megawatt hour MWhSO Megawatt hour Sent Out TWh Terawatt hour Other AGSA Auditor-General of South Africa Board Eskom Board of Directors B-BBEE Broad-Based Black Economic Empowerment CA(SA) Chartered Accountant of South Africa CIDB Construction Industry Development Board CSI Corporate Social Investment DFFE Department of Forestry, Fisheries and Environment EAF Energy Availability Factor EUF Energy Utilisation Factor Exco Executive Committee IPP Independent Power Producer IT Information Technology KPI Key Performance Indicator KRN Key Revision Number MYPD Multi-Year Price Determination NERSA National Energy Regulator of South Africa OCGT Open Cycle Gas Turbine OVS Online Vending System RCA Regulatory Clearing Account RIMF Risk and Integrity Management Framework SAPS South African Police Service SARS South African Revenue Services SCOPA Standing Committee on Public Accounts SIU Special Investigations Unit STI Short-term Incentive Scheme TMPS Total Measured Procurement Spend UCLF Unplanned Capacity Loss Factor Zondo Commission Judicial Commission of Inquiry into Allegations of State Capture ABC 138 Definitions Cash interest cover ratio Net cash flows from operating activities divided by the aggregate of interest paid and received from financing activities EBITDA Revenue plus other income minus primary energy, employee benefit expense, impairment of financial assets, impairment of other assets and other expenses EBITDA margin EBITDA divided by revenue Free funds from operations Net cash flows from operating activities minus cash flows from changes in working capital Liquid assets Treasury investments plus cash and cash equivalents Net debt Debt securities and borrowings plus lease liabilities plus derivative liabilities held for risk management (used to hedge other items of net debt) minus derivative assets held for risk management (used to hedge other items of net debt) minus payments made in advance (used to secure borrowings raised) minus cash and cash equivalents Net debt service cover Net cash flows from operating activities divided by the aggregate of debt repaid and interest paid and received from financing activities Net profit margin Net profit divided by revenue Working capital current assets Inventories plus payments made in advance (current portion) plus trade and other receivables (current portion) plus taxation asset Working capital current liabilities Trade and other payables (current portion) plus payments received in advance (current portion) plus provisions (current portion) plus employee benefit obligations (current portion) plus taxation liability Working capital ratio Working capital current assets divided by working capital current liabilities Refer to the integrated report for definitions relating to the shareholder compact key performance indicators. ABC 139 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2025 Company information Eskom Holdings SOC Ltd Incorporated in the Republic of South Africa Registration number 2002/015527/30 Registered office Eskom Megawatt Park 2 Maxwell Drive Sunninghill Sandton 2157 PO Box 1091 Johannesburg 2000 Switchboard +27 11 800 8111 Customer call centre 08600 ESKOM or 08600 37566 Debt sponsor Nedbank Corporate and Investment Banking, a division of Nedbank Limited JSE alpha code BIESKM For more information Investor relations Lerato Mashinini InvestorRelations@eskom.co.za Media enquiries Daphne Mokwena MediaDesk@eskom.co.za Group Chief Financial Officer Calib Cassim OfficeoftheCFO@eskom.co.za Queries or feedback on our reports IRfeedback@eskom.co.za Our suite of reports covering our integrated results for 2025 is available at https://www.eskom.co.za/investors/integrated-results/ ABC 140 ABC 141 Notes ABC 142 ABC www.eskom.co.za ABC