Redefining for ab e tt er fu t ure CONDENSED GROUP INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2024 ii Contents Approval of the condensed group interim financial statements 2 Condensed group statement of financial position 3 Condensed group income statement 4 Condensed group statement of comprehensive income 4 Condensed group statement of changes in equity 5 Condensed group statement of cash flows 6 Notes to the condensed group interim financial statements 7 1 Structure and activities 7 2 Basis of preparation 7 3 Significant changes in accounting policies 8 4 Critical accounting estimates and judgements 8 5 Segment information 9 6 Issuances, repurchases and repayments of debt securities and borrowings, loan from shareholder and share capital 10 7 Dividend paid 11 8 Significant events and transactions 11 9 Seasonality of interim results 11 10 Revenue 12 11 Primary energy 12 12 Employee benefit expense 12 13 Finance cost 12 14 Income tax 12 15 Accounting classification and fair value 13 16 Material events subsequent to 30 September 2024 18 17 Restatement of comparatives 19 18 Exchange rates 19 19 Reportable irregularities 19 20 New standards and interpretations 20 The condensed group interim financial statements for the six months ended 30 September 2024 have been prepared under the supervision of the chief financial officer (CFO), C Cassim CA(SA) and were published on 30 January 2025. The condensed group interim financial statements for the six months ended 30 September 2024 and 30 September 2023 have not been audited, reviewed or reported on by the external auditors of the group. The financial information for the year ended 31 March 2024 is as reflected in the audited financial statements. 1 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Approval of the condensed group interim financial statements Basis of preparation The unaudited condensed group interim financial statements from page 3 to page 21 for the six months ended 30 September 2024 have been prepared in accordance with the recognition and measurement requirements of IFRS® Accounting Standards, the presentation and disclosure requirements of IAS® 34 Interim Financial Reporting and in the manner required by the Companies Act of South Africa, 71 of 2008 (Companies Act). Going concern The board made an assessment of the ability of the group to continue as a going concern in the foreseeable future. The considerations, challenges and risks assessed by the board are detailed in note 2.1. The board considered that there are uncertainties and dependencies that exist both from a timing of intervention perspective as well as whether the plans will materialise as anticipated. 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 will be funded from cash from operations. The board concluded after carefully considering the progress of the initiatives included in note 2.1 and the continued financial support from the government through the debt relief arrangement that there is a reasonable expectation that the group has 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 condensed group interim financial statements have therefore been prepared on a going-concern basis. Approval The board is of the opinion, based on the information available to date, that the condensed group interim financial statements fairly present the financial position of the group at 30 September 2024 and the results of the operations and cash flow information for the six months then ended. The condensed group interim financial statements have been approved by the board and signed on its behalf on 30 January 2025 by: M Nyati DL Marokane C Cassim Chairman Group chief executive Chief financial officer 2 Condensed group statement of financial position at 30 September 2024 Unaudited Audited Unaudited Restated1 30 September 31 March 30 September 2024 2024 2023 Rm Rm Rm Assets Non-current 740 133 750 872 750 730 Property, plant and equipment and intangible assets 680 444 684 388 673 996 Future fuel supplies 6 661 6 782 4 759 Investment in equity-accounted investees 304 346 312 Inventories 14 525 13 297 12 574 Deferred tax 281 81 17 514 Derivatives held for risk management and embedded derivatives 18 228 29 367 25 329 Payments made in advance 1 746 1 793 2 166 Trade, finance lease, loan and other receivables 12 540 11 770 12 559 Investments 5 404 3 048 1 521 Current 137 468 115 450 97 621 Inventories 28 211 28 293 25 433 Taxation 37 11 73 Derivatives held for risk management and embedded derivatives 6 178 9 450 2 085 Payments made in advance 1 939 1 413 1 629 Trade, finance lease, loan and other receivables 47 452 36 220 35 668 Investments 20 640 16 478 16 378 Cash and cash equivalents 33 011 23 585 16 355 Total assets 877 601 866 322 848 351 Equity Capital and reserves 270 988 222 858 236 095 Liabilities Non-current 477 253 486 657 491 045 Debt securities and borrowings 349 311 359 692 386 931 Derivatives held for risk management 2 023 27 60 Deferred tax 13 955 10 412 – Employee benefit obligations 19 595 17 448 16 420 Provisions 45 889 52 561 49 157 Trade and other payables and lease liabilities 6 431 6 817 7 245 Payments received in advance, contract liabilities and deferred income 40 049 39 700 31 232 Current 129 360 156 807 121 211 Debt securities and borrowings 46 037 52 508 39 792 Loan from shareholder 8 057 32 000 16 000 Derivatives held for risk management 3 841 566 1 599 Employee benefit obligations 5 606 3 777 4 468 Provisions 9 362 9 325 6 247 Trade and other payables and lease liabilities 48 963 50 514 47 150 Payments received in advance, contract liabilities and deferred income 7 494 7 984 5 955 Taxation – 133 – Total liabilities 606 613 643 464 612 256 Total equity and liabilities 877 601 866 322 848 351 1. Restated. Refer to note 17. 3 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Condensed group income statement for the six months ended 30 September 2024 Unaudited Unaudited Audited Restated1 six months six months year ended ended ended 30 September 30 September 31 March 2024 2023 2024 Note Rm Rm Rm Revenue 10 183 711 158 627 295 814 Other income 694 681 1 295 Primary energy 11 (79 288) (84 868) (173 729) Employee benefit expense 12 (20 436) (17 352) (35 096) Net impairment and write down of assets (3 736) (1 873) (3 433) Other expenses (19 289) (17 570) (41 441) Profit before depreciation and amortisation expense and net fair value and foreign exchange (losses)/gains (EBITDA)2 61 656 37 645 43 410 Depreciation and amortisation expense (15 394) (16 746) (33 239) Net fair value and foreign exchange (losses)/gains (5 542) 974 2 644 Profit before net finance cost 40 720 21 873 12 815 Net finance cost (17 751) (19 700) (38 389) Finance income 3 276 2 283 4 859 Finance cost 13 (21 027) (21 983) (43 248) Share of profit of equity-accounted investees, net of tax 60 71 105 Profit/(loss) before tax 23 029 2 244 (25 469) Income tax 14 (5 197) (630) (29 546) Profit/(loss) for the period3 17 832 1 614 (55 015) Condensed group statement of comprehensive income for the six months ended 30 September 2024 Unaudited Unaudited Audited Restated1 six months six months year ended ended ended 30 September 30 September 31 March 2024 2023 2024 Rm Rm Rm Profit/(loss) for the period3 17 832 1 614 (55 015) Other comprehensive (loss)/income (1 702) 537 (71) Items that may be reclassified subsequently to profit or loss (478) (307) (527) Cash flow hedges (478) (455) (730) Foreign currency translation differences on foreign operations – 25 6 Income tax thereon – 123 197 Items that may not be reclassified subsequently to profit or loss (1 224) 844 456 Re-measurement of benefits (1 246) 1 156 625 Income tax thereon 22 (312) (169) Total comprehensive income/(loss) for the period3 16 130 2 151 (55 086) 1. Restated. Refer to note 17. 2. Non-generally accepted accounting principles income statement measure. 3. A nominal amount is attributable to the non-controlling interest in the group. The remainder is attributable to the owner of the group. 4 Condensed group statement of changes in equity for the six months ended 30 September 2024 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 Balance at 31 March 2023 restated1 241 550 – (335) (12 757) 47 5 439 233 944 Profit for the period – – – – – 1 614 1 614 Other comprehensive (loss)/income, net of tax – – (332) – 25 844 537 Transfer between reserves – – – 9 245 – (9 245) – Balance at 30 September 2023 restated1 241 550 – (667) (3 512) 72 (1 348) 236 095 Loss for the period – – – – – (56 629) (56 629) Other comprehensive loss, net of tax – – (201) – (19) (388) (608) Conversion of loan from shareholder – 44 000 – – – – 44 000 Transfer between reserves – – – (6 801) – 6 801 – Balance at 31 March 2024 241 550 44 000 (868) (10 313) 53 (51 564) 222 858 Profit for the period – – – – – 17 832 17 832 Other comprehensive loss, net of tax – – (478) – – (1 224) (1 702) Share capital issued 76 000 (44 000) – – – – 32 000 Transfer between reserves – – – (921) – 921 – Balance at 30 September 2024 317 550 – (1 346) (11 234) 53 (34 035) 270 988 1. Restated. Refer to note 17. 5 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Condensed group statement of cash flows for the six months ended 30 September 2024 Unaudited Unaudited Audited six months six months year ended ended ended 30 September 30 September 31 March 2024 2023 2024 Rm Rm Rm Cash flows from operating activities Profit/(loss) before tax 23 029 2 2441 (25 469) Adjustment for non-cash items 45 167 37 8351 79 563 Depreciation and amortisation expense 15 394 16 746 33 239 Finance cost 21 027 21 983 43 248 Other 8 746 (894) 3 076 Changes in working capital (19 631) (13 537)1 (13 579) Cash generated from operations 48 565 26 542 40 515 Net cash generated (used in)/from derivatives held for risk management (610) 600 794 Finance income received 258 202 412 Finance cost paid – (12) (4) Income taxes paid (1 991) (661) (1 321) 46 222 26 671 40 396 Cash flows used in investing activities Disposals of property, plant and equipment and intangible assets 163 285 1 082 Acquisitions of property, plant and equipment and intangible assets (15 493) (15 018) (42 577) Acquisitions of future fuel supplies (1 266) (754) (2 857) Acquisitions of treasury investments (1 398) – (1 002) Disposals of insurance investments 14 480 12 381 25 560 Acquisitions of insurance investments (19 296) (13 576) (27 295) Payments made in advance (15) (118) (101) Cash used in provisions (185) (121) (135) Net cash generated from/(used in) derivatives held for risk management 8 (193) (221) Finance income received 1 308 1 070 2 336 Other cash from investing activities 175 156 267 (21 519) (15 888) (44 943) Cash flows used in financing activities Debt securities and borrowings raised 5 485 35 670 23 562 Loan from shareholder raised 8 000 – 76 000 Payments made in advance (80) (312) (426) Debt securities and borrowings repaid (10 554) (30 850) (54 594) Net cash from derivatives held for risk management (1 698) 11 399 10 992 Cash used in lease liabilities (492) (360) (721) Finance income received 893 594 1 110 Finance cost paid (16 719) (18 063) (35 255) Taxes paid (32) (36) (71) (15 197) (1 958) 20 597 Net increase in cash and cash equivalents 9 506 8 825 16 050 Cash and cash equivalents at beginning of the period 23 585 7 516 7 516 Foreign currency translation – 25 6 Effect of movements in exchange rates on cash held (80) (11) 13 Cash and cash equivalents at end of the period 33 011 16 355 23 585 1. Restated. Refer to note 17. 6 Notes to the condensed group interim financial statements for the six months ended 30 September 2024 1. Structure and activities 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 Energy and Electricity 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 Independent Power Producers (IPPs) and international suppliers in southern Africa. The primary business focus of the other subsidiaries is to support the electricity business. 2. Basis of preparation The condensed group interim financial statements of Eskom Holdings SOC Ltd as at and for the six months ended 30 September 2024 comprise the Eskom company, its subsidiaries, joint ventures, associates and structured entities (together the group). The condensed group interim financial statements do not include all of the information required for full financial statements and should be read in conjunction with the Eskom Holdings SOC Ltd 31 March 2024 group annual financial statements. The annual financial statements of the group as at and for the year ended 31 March 2024 are available for inspection at the company's registered office and on the Eskom website at www.eskom.co.za. The condensed group interim financial statements are prepared in accordance with the recognition and measurement requirements of IFRS Accounting Standards, the presentation and disclosure requirements of IAS 34 Interim Financial Reporting and in the manner required by the Companies Act. The condensed group interim 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 2.1 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 period ended 30 September 2024 including the net profit after tax of R17 832 million and the net current assets of R8 108 million. • Considered the impact of the cash flow forecast for the 18 months ending 31 March 2026. • Noted the improvement in the group’s financial indicators compared to 31 March 2024, in particular the improvement in EBITDA and EBITDA margin. • Noted the increase in the cash and cash equivalents balance to R33 011 million from R23 585 million at 31 March 2024 mainly due to the debt relief support received as well as the improvement in the cash from operations during the period. • Noted that the liquidity in the longer term after the debt relief period remains at risk because of the financial sustainability challenges arising from an inadequate tariff path, high debt service costs, escalating muncipal arrear debt, operational inefficiencies, the impact of fraud and corruption and continued focus on addressing plant performance as well as sourcing of funding for the Transmission Development Plan. • Noted the remaining portion of the debt relief support from government of R66 billion in 2025 and R40 billion in 2026, including the conditions 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 together with the takeover of R70 billion of Eskom debt (principal and future interest) in 2026 (to be finalised), thereby allowing Eskom to better manage its liquidity position as well as the reduction of R2 billion in the debt relief support for 2025 as a result of the delay in the disposal of Eskom Finance Company SOC Ltd (EFC). The sale of EFC continues to be prioritised with board accepting a binding offer from the approved bidder in October 2024, subject to Public Finance Management Act, 1 of 1999 (PFMA) approval. • Noted and considered the implications of the Eskom Debt Relief Amendment Act that provides for the monthly payment of interest by Eskom on amounts advanced as a loan at the 91-day Treasury Bill rate and power to the Minister to reduce the support to Eskom in the event of non- compliance with the conditions. Any loan amount that fails to qualify for the conversion of debt to equity because of non-compliance with the conditions will become due and payable after the debt relief period (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, and that existing government guarantees issued on borrowings before 31 March 2023 in terms of the government guarantee facility of R350 billion remain in place until settlement of the guaranteed debt. All other operational and relevant capital expenditure spending are financed through operational cash flows and drawdowns from existing project related loan agreements. • Considered the impact of the continuous increase in overdue electricity receivables mainly due to growing municipal 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 should be resolved for the legal separation of the distribution business. • Considered the impact of the extension of the Koeberg useful life for another 20 years which decreased the nuclear decommissioning provision because of later cash outflows. The licence extension decision on unit 2 was deferred until later but prior to the licence expiry date of 9 November 2025. • Considered the impact on future cash flows of ongoing ring-fenced funds set aside for the funding of future nuclear decommissioning activities as directed by the National Nuclear Regulator whilst discussions regarding a permanent solution are underway. • Considered the impact of the dispute between Eskom and South African Revenue Services (SARS) that was resolved on 18 October 2024 relating to previously disallowed claims for fuel levy refunds for a net amount of R9.2 billion payable to Eskom in accordance with the terms of the settlement agreement with R5.5 billion received by January 2025. Refer to note 16. • Considered the impact of improved generating plant performance even though certain challenges remain. A worsening of generating plant performance could negatively impact cash flow due to lost revenue and an increase in costs, including the level of spend required on open cycle gas turbines (OCGT). The group’s generation capacity 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 timing and impact of separate licence price determinations, continued improved plant performance and addressing payment by municipalities are critical factors in the going-concern assessment. • Noted the increase in non-technical energy losses because of illegal connections and selling of illegal tokens which increase the current and future costs incurred by Eskom to produce energy with no corresponding revenue received. 7 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 2. Basis of preparation (continued) 2.1 Going concern (continued) • Recognised the progress made with the legal separation of Eskom. NTCSA is in a tax paying position from 2025 onwards based on the latest forecasts and paid provisional tax of R1.4 billion at 30 September 2024. The corporatisation and operationalisation of the National Electricity Distribution Company South Africa SOC Ltd is delayed due to external dependencies and the delayed operationalisation of NTCSA. • 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 that could have an 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. • Considered the possible impact if key risks materialise and acknowledged that improved plant performance, 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 group’s going- concern status 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 balance sheet. The Eskom debt relief arrangement is assisting in putting 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 is not yielding 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. The disbursement of R8 billion received for the period was approved for conversion to equity on 21 October 2024. The remaining portion of the debt relief for 2025 of R56 billion is expected to be received before the end of the 2025 financial year. Refer to note 16. • There is continued focus on implementing various strategies to recover overdue trade receivables. The successful outcome of these strategies remains uncertain. Eskom 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 commencement of the Electricity Regulation Amendment Act, 38 of 2024 on 1 January 2025 provides for National Energy Regulator of South Africa (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 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. It is envisaged that there will be a transition period, most likely between three to five years, as the development, approval and implementation of the market code, rules and trading platform (system) as well as the qualifying criteria for participants is a time-consuming process involving various stakeholder consultations and approval by NERSA. • The cost structures and capital programme of the group are continuously reviewed to extract cost savings and improve cash flows. • The group is aware of 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 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 2.1 and the continued financial support from the government through the debt relief arrangement that there is a reasonable expectation that the group 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 condensed group interim financial statements have therefore been prepared on a going-concern basis. 3. Significant changes in accounting policies The accounting policies are consistent with those applied in the audited financial statements as at 31 March 2024. 4. Critical accounting estimates and judgements The significant estimates and judgements made by management in applying the accounting policies and the key sources of estimation uncertainty were substantially the same as those applied to the audited financial statements as at 31 March 2024. 8 5. Segment information Management has determined the reportable segments based on the reports regularly provided, reviewed and used by Executive Committee (Exco) to make strategic decisions and assess performance of the segments. Exco assesses the performance of the operating segments based on a measure of profit or loss consistent with that of the financial statements. The amounts provided to Exco with respect to total assets and liabilities are measured in terms of IFRS Accounting Standards. These assets and liabilities are allocated based on the operation of the segment and the physical location of the assets. The operations in each of the group's reportable segments are as follows: Segment Operations Generation Consists of generation, primary energy and group capital functions that respectively: • generates electricity for sale to transmission • procures primary energy • plan, develop, execute and monitor generation-related capital projects Transmission (NTCSA) Consists of transmission network, international customers and operator functions that respectively: • operates and maintains the network for transmitting electricity • purchase and sale of bulk electricity to international customers • operates electricity trading system by balancing the supply and demand of electricity, managing voltage levels and purchase of electricity from generation and IPPs and sale of electricity to distribution Distribution Consists of five operating clusters across nine provinces who provides, operates and maintains the distribution network for distributing electricity and sale of electricity to local large and small power users (including 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 which do not qualify as a reportable segment in terms of IFRS 8. Inter-segment revenue and recoveries (achieved through transfer pricing) for the flow of electricity from generator to consumer was allocated between the generation, transmission and distribution segments as derived from the revenue in the approved corporate plan based on cost recovery plus a return on assets informed by the regulatory methodology principles and adjusted in line with records of decision as well as Regulatory Clearing Account and court decisions. Inter-segment revenue and recoveries for transmission therefore reflects revenue for network related services and energy procured from external sources. The sale of electricity by generation to transmission is based on a two-part tariff (reflective of the generating costs) consisting of fixed capacity (depressed because of an inadequate return on assets on allowable revenue in the NERSA determinations) and variable energy components. Transmission incurs additional energy costs (energy purchases from IPPs and import of energy) and supplies electricity and network related services to distribution at a marked-up tariff (costs and return on assets) consisting of fixed and variable components allocated on a ratio that aligns with the ratio in the tariff charged to customers as determined by NERSA. Transmission also charges generation for their portion of transmission network cost (grid code mandates equal recovery from generation and consumer which is recovered via distribution). Transfer pricing between the segments could be adjusted in future periods as a recovery or reduction to account for differences between actual and estimated information. It is expected that NERSA will determine separate revenue determinations per licensee in the future based on similar regulatory methodology principles following the corporatisation of NTCSA. All direct corporate overhead costs were allocated to the relevant segments based on service consumption and 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 divisional funding requirements. 9 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 5. Segment information (continued) The segment information provided to Exco for the reportable segments is as follows: Generation Transmission Distribution All other Reallocation and Group segments inter-segment transactions Rm Rm Rm Rm Rm Rm 30 September 2024 External revenue – 8 619 175 092 450 (450) 183 711 Inter-segment revenue/recoveries 106 477 48 834 (155 283) 8 391 (8 419) – Total revenue 106 477 57 453 19 809 8 841 (8 869) 183 711 (Loss)/profit before tax (4 308) 26 170 (857) 955 1 069 23 029 Income tax – (4 636) – (242) (319) (5 197) (Loss)/profit after tax (4 308) 21 534 (857) 713 750 17 832 Segment assets 576 307 127 584 153 013 171 412 (150 715) 877 601 Segment liabilities 87 144 87 148 88 151 470 656 (126 486) 606 613 30 September 2023 External revenue – 5 057 153 570 843 (843) 158 627 Inter-segment revenue/recoveries 95 782 42 368 (138 113) 6 624 (6 661) – Total revenue 95 782 47 425 15 457 7 467 (7 504) 158 627 (Loss)/profit before tax (10 859)1 13 561 (947) 818 (329) 2 244 Income tax – – – (690)1 60 (630) (Loss)/profit after tax (10 859) 13 561 (947) 128 (269) 1 614 Segment assets 552 4761 82 045 130 778 116 2091 (33 157) 848 351 Segment liabilities 84 807 21 990 54 809 484 764 (34 114) 612 256 31 March 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 (Loss)/profit before tax (36 014) 6 963 964 3 637 (1 019) (25 469) Income tax – – – (29 793) 247 (29 546) (Loss)/profit after tax (36 014) 6 963 964 (26 156) (772) (55 015) Segment assets 561 658 85 157 143 681 164 029 (88 203) 866 322 Segment liabilities 94 159 32 287 65 175 518 964 (67 121) 643 464 6. Issuances, repurchases and repayments of debt securities and borrowings, loan from shareholder and share capital 6.1 Debt securities and borrowings and loan from shareholder Debt relief support from government of R32 billion was converted to equity. The debt relief received was used to repay loans and interest. The debt raised and repaid by the group is disclosed in the statement of cash flows. 6.2 Share capital Unaudited Audited Unaudited six months ended year ended six months ended 30 September 31 March 30 September 2024 2024 2023 Shares Shares Shares Authorised ordinary shares 500 000 000 000 300 000 000 000 300 000 000 000 Issued ordinary shares Balance at beginning of the period 241 550 276 001 241 550 276 001 241 550 276 001 Share capital issued 76 000 000 000 – – Balance at end of the period 317 550 276 001 241 550 276 001 241 550 276 001 The share capital increased because of the conversion to share capital of R32 billion as approved by the Minister of Finance. In addition share capital was also issued for the R44 billion already approved for conversion as reflected in other capital at 31 March 2024. 1. Restated. Refer to note 17. 10 7. Dividend paid No dividend was paid to the shareholder during the six months ended 30 September 2024 nor in the comparative periods presented. 8. Significant events and transactions The following significant movements and events occurred in the six months ended 30 September 2024: 8.1 Property, plant and equipment and provisions Generating plant and the related nuclear decommissioning provision decreased because of the licence extension of Koeberg power station unit 1 which extended the useful life of the plant with 20 years. 8.2 Movements in derivatives held for risk management and debt securities and borrowings The net asset position relating to derivatives held for risk management (which hedges foreign debt and borrowings) and debt securities and borrowings balance decreased because of exchange rate fluctuations caused by the strengthening of the rand against major currencies. 8.3 Trade and other receivables and net impairment loss Trade and other receivables increased as a result of higher revenue because of the tariff increase, suspension of loadshedding and the impact of seasonality (refer to note 9). Trade and other receivables were also impacted by declining municipal payment levels which resulted in an increase in net impairment loss. 8.4 Embedded derivatives Embedded derivatives decreased because of the strengthening of the rand against the dollar that resulted in a lower upside threshold linked to the ferrochrome price. 8.5 Non-technical losses The non-technical losses increased from 7.2% at 31 March 2024 to 8.5% at 30 September 2024. Non-technical losses was negatively impacted by illegal connections, meter tampering and the compromise of the online vending system that resulted in the bulk generation of illegal prepaid electricity tokens. 9. Seasonality of interim results The results of the group were impacted by the following seasonal fluctuations: • Revenue from electricity sales and consequently electricity receivables and the related value added tax impact are normally higher during the first six months of the financial year (winter months) as compared to the summer months because of the high demand season tariff increases. • Primary energy costs associated with renewable IPP purchases are lower in the winter months (first six months of the financial year) due to a lower proportion of power being produced from renewable sources during this time. • Less routine maintenance work (and consequently lower costs) is normally undertaken during the winter months which coincides with the first six months of the financial year. Repairs and maintenance however increased for the six month period to 30 September due to extensive planned and unplanned maintenance performed to address plant performance challenges aligned to the generation recovery plan. The results of the group for the period were also impacted by the following: • Performance of the coal-fired power stations improved which resulted in a lower need for the use of Eskom and IPP OCGTs and decreased primary energy costs. • There was no need to implement loadshedding since 26 March 2024 because of the improved plant performance which together with the tariff increase of 12.74% for the 2025 financial year resulted in an increase in sales and revenue. • The EBITDA, EBITDA margin and net profit improved significantly because of the increase in revenue and lower marginal electricity generation costs which led to a significant improvement in liquidity. 11 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 Unaudited Unaudited Audited six months ended six months ended year ended 30 September 30 September 31 March 2024 2023 2024 Rm Rm Rm 10. Revenue Redistributors 75 929 64 465 115 460 Invoiced to customers 83 860 70 691 124 302 Amounts not meeting revenue recognition criteria (12 981) (10 580) (17 081) Recognised on a cash received basis 5 050 4 354 8 239 Residential 4 526 3 994 7 615 Invoiced to customers 4 501 4 027 7 671 Amounts not meeting revenue recognition criteria (33) (83) (164) Recognised on a cash received basis 58 50 108 Industrial 33 420 31 891 61 367 Mining 29 548 26 816 47 923 Commercial 13 557 11 178 20 900 Agricultural 8 073 6 592 13 858 International 8 893 5 267 11 457 Other customers 2 504 2 240 4 152 Post-paid electricity sales 176 450 152 443 282 732 Prepaid electricity sales 6 498 5 460 11 329 Total electricity sales 182 948 157 903 294 061 Other 763 724 1 753 183 711 158 627 295 814 Sales of electricity to local customers are included in the distribution operating segment. International sales are included in the transmission segment. Other revenue consists of reconnection fees and ad hoc sundry revenue. Connections occur mainly within the transmission and distribution operating segments. 11. Primary energy Own generation costs 54 495 57 9401 117 873 International electricity purchases 4 025 3 981 8 081 Independent power producers 20 768 22 947 47 775 79 288 84 868 173 729 12. Employee benefit expense Gross employee benefit expense 21 439 18 327 37 099 Capitalised to property, plant and equipment (1 003) (975) (2 003) 20 436 17 352 35 096 13. Finance cost 25 544 51 329 Gross finance cost 24 705 Capitalised to property, plant and equipment (3 678) (3 561) (8 081) 21 027 21 983 43 248 14. Income tax Income tax for the interim period is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year which is applied to the pre-tax income of the interim period. 1. Restated. Refer to note 17. 12 15. Accounting classification and fair value 15.1 Accounting classification 30 September 2024 (unaudited) Fair value through Amortised Other assets Total profit or loss cost and liabilities1 Rm Rm Rm Rm Financial assets Derivatives held for risk management and embedded derivatives 11 984 – 12 422 24 406 Foreign exchange contracts 11 – 3 14 Cross-currency swaps 2 128 – 12 419 14 547 Commodity forwards 1 – – 1 Commodity options 6 – – 6 Inflation-linked swaps 418 – – 418 Embedded derivatives 9 420 – – 9 420 Trade, finance lease, loan and other receivables – 53 898 196 54 094 Loans receivable – 7 757 – 7 757 Finance lease receivables – – 196 196 Trade and other receivables – 46 141 – 46 141 Investments 1 841 24 203 – 26 044 Treasury investments – 2 509 – 2 509 Negotiable certificates of deposit – 17 726 – 17 726 Floating rate notes – 2 895 – 2 895 Inflation-linked bonds – 1 073 – 1 073 Listed shares 1 841 – – 1 841 Cash and cash equivalents – 33 011 – 33 011 Bank balances – 13 561 – 13 561 Fixed deposits – 19 450 – 19 450 13 825 111 112 12 618 137 555 Financial liabilities Debt securities and borrowings – 395 348 – 395 348 Eskom bonds – 168 621 – 168 621 Commercial paper – 681 – 681 Eurorand zero coupon bonds – 8 546 – 8 546 Foreign bonds – 59 092 – 59 092 Development financing institutions – 131 846 – 131 846 Export credit facilities – 21 120 – 21 120 Other loans – 5 442 – 5 442 Derivatives held for risk management 4 766 – 1 098 5 864 Foreign exchange contracts 2 472 – 558 3 030 Cross-currency swaps 1 848 – 540 2 388 Commodity forwards 370 – – 370 Commodity options 6 – – 6 Credit default swaps 23 – – 23 Inflation-linked swaps 47 – – 47 Trade and other payables and lease liabilities – 44 186 6 967 51 153 Lease liabilities – – 6 967 6 967 Trade and other payables – 44 186 – 44 186 4 766 439 534 8 065 452 365 1. Other assets and liabilities include derivatives held for risk management designated as hedges measured at fair value through other comprehensive income and finance leases measured at amortised cost. The total assets measured at amortised cost amounts to R111 308 million and the total liabilities measured at amortised cost amounts to R446 501 million. 13 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 15. Accounting classification and fair value (continued) 15.1 Accounting classification (continued) 31 March 2024 (audited) Fair value Amortised Other assets Total through profit cost and liabilities1 or loss Rm Rm Rm Rm Financial assets Derivatives held for risk management and embedded derivatives 17 375 – 21 442 38 817 Foreign exchange contracts 209 – 56 265 Cross-currency swaps 4 819 – 21 386 26 205 Commodity forwards 210 – – 210 Commodity options 7 – – 7 Inflation-linked swaps 329 – – 329 Embedded derivatives 11 801 – – 11 801 Trade, finance lease, loan and other receivables – 43 209 211 43 420 Loans receivable – 7 773 – 7 773 Finance lease receivables – – 211 211 Trade and other receivables – 35 436 – 35 436 Investments 1 550 17 976 – 19 526 Treasury investments – 1 024 – 1 024 Negotiable certificates of deposit – 13 900 – 13 900 Floating rate notes – 2 024 – 2 024 Inflation-linked swaps – 1 028 – 1 028 Listed shares 1 550 – – 1 550 Cash and cash equivalents – 23 585 – 23 585 Bank balances – 10 865 – 10 865 Fixed deposits – 12 720 – 12 720 18 925 84 770 21 653 125 348 Financial liabilities Debt securities and borrowings – 412 200 – 412 200 Eskom bonds – 165 809 – 165 809 Commercial paper – 748 – 748 Eurorand zero coupon bonds – 8 045 – 8 045 Foreign bonds – 64 551 – 64 551 Development financing institutions – 139 270 – 139 270 Export credit facilities – 25 583 – 25 583 Other loans – 8 194 – 8 194 Derivatives held for risk management 358 – 235 593 Foreign exchange contracts 318 – 45 363 Cross-currency swaps 12 – 190 202 Credit default swaps 27 – – 27 Inflation-linked swaps 1 – – 1 Trade and other payables and lease liabilities – 47 912 7 403 55 315 Lease liabilities – – 7 403 7 403 Trade and other payables – 47 912 – 47 912 358 460 112 7 638 468 108 1. Other assets and liabilities include derivatives held for risk management designated as hedges measured at fair value through other comprehensive income and finance leases measured at amortised cost. The total assets measured at amortised cost amounts to R84 981 million and the total liabilities measured at amortised cost amounts to R467 515 million. 14 30 September 2023 (unaudited) Fair value Amortised Other assets Total through profit cost and liabilities1 or loss Rm Rm Rm Rm Financial assets Derivatives held for risk management and embedded derivatives 4 125 – 23 289 27 414 Foreign exchange contracts 378 – 27 405 Cross-currency swaps 2 538 – 23 262 25 800 Commodity forwards 259 – – 259 Inflation-linked swaps 295 – – 295 Embedded derivatives 655 – – 655 Trade, finance lease, loan and other receivables – 43 642 236 43 878 Loans receivable – 8 063 – 8 063 Finance lease receivables – – 236 236 Trade and other receivables – 35 579 – 35 579 Investments 1 467 16 432 – 17 899 Negotiable certificates of deposit – 14 911 – 14 911 Floating rate notes – 1 021 – 1 021 Inflation-linked bonds – 500 – 500 Listed shares 1 467 – – 1 467 Cash and cash equivalents – 16 355 – 16 355 Bank balances – 9 226 – 9 226 Fixed deposits – 7 129 – 7 129 5 592 76 429 23 525 105 546 Financial liabilities Debt securities and borrowings – 426 723 – 426 723 Eskom bonds – 162 881 – 162 881 Commercial paper – 827 – 827 Eurorand zero coupon bonds – 7 572 – 7 572 Foreign bonds – 63 965 – 63 965 Development financing institutions – 139 702 – 139 702 Export credit facilities – 27 863 – 27 863 Other loans – 23 913 – 23 913 Derivatives held for risk management 890 – 769 1 659 Foreign exchange contracts 821 – 69 890 Cross-currency swaps 11 – 700 711 Credit default swaps 56 – – 56 Inflation-linked swaps 2 – – 2 Trade and other payables and lease liabilities – 43 663 7 769 51 432 Lease liabilities – – 7 769 7 769 Trade and other payables – 43 663 – 43 663 890 470 386 8 538 479 814 1. Other assets and liabilities include derivatives held for risk management designated as hedges measured at fair value through other comprehensive income and finance leases measured at amortised cost. The total assets measured at amortised cost amounts to R76 665 million and the total liabilities measured at amortised cost amounts to R478 155 million. 15 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 15. Accounting classification and fair value (continued) 15.2 Fair value Valuation processes and principal markets The group has a control framework in place for the measurement of fair values. It includes a valuation team (supported by external specialist) 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. 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 and export credit agencies. Valuation techniques and levels 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: Observable inputs other than quoted prices included within level 1 Loans receivable (excluding home loans), 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 equivalents a reasonable approximation of fair value. Level 3: Unobservable inputs Embedded derivatives Fair value determined using unobservable inputs. Loans receivable (home loans) The fair value of home loans is 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. There were no changes in the valuation techniques applied nor transfers between level 1, 2 or 3 of the fair value hierarchy during the six months ended 30 September 2024 nor in the comparative periods presented. 16 Fair value hierarchy The disclosure of the fair value hierarchy of financial instruments has been enhanced in the current period and is as follows: 30 September 2024 31 March 2024 30 September 2023 (unaudited) (audited) (unaudited) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 Rm Rm Rm Rm Rm Rm Rm Rm Rm Financial assets Derivatives held for risk management and embedded derivatives – 14 986 9 420 – 27 016 11 801 – 26 759 655 Foreign exchange contracts – 14 – – 265 – – 405 – Cross-currency swaps – 14 547 – – 26 205 – – 25 800 – Commodity forwards – 1 – – 210 – – 259 – Commodity options – 6 – – 7 – – – – Inflation-linked swaps – 418 – – 329 – – 295 – Embedded derivatives – – 9 420 – – 11 801 – – 655 Loans receivable – 470 6 838 – 415 6 646 – 178 7 460 Home loans – – 6 838 – – 6 646 – – 7 460 Other loans – 470 – – 415 – – 178 – Investments 1 841 24 376 – 1 550 18 129 – 1 467 16 492 – Treasury investment – 2 529 – – 1 039 – – – – Negotiable certificates of deposit – 17 853 – – 13 925 – – 14 950 – Floating rate notes – 2 906 – – 2 112 – – 1 064 – Inflation-linked bonds – 1 088 – – 1 053 – – 478 – Listed shares 1 841 – – 1 550 – – 1 467 – – Financial liabilities Debt securities and borrowings – 387 341 – – 385 808 – – 397 929 – Eskom bonds – 156 284 – – 144 176 – – 139 508 – Commercial paper – 680 – – 748 – – 826 – Eurorand zero coupon bonds – 7 145 – – 6 348 – – 5 749 – Foreign bonds – 60 861 – – 63 953 – – 61 178 – Development financing institutions – 133 460 – – 134 585 – – 136 230 – Export credit facilities – 23 363 – – 27 622 – – 30 070 – Other loans – 5 548 – – 8 376 – – 24 368 – Derivatives held for risk management – 5 864 – – 593 – – 1 659 – Foreign exchange contracts – 3 030 – – 363 – – 890 – Cross-currency swaps – 2 388 – – 202 – – 711 – Commodity forwards – 370 – – – – – – – Commodity options – 6 – – – – – – – Credit default swaps – 23 – – 27 – – 56 – Inflation-linked swaps – 47 – – 1 – – 2 – 15.3 Day-one gain/(loss) The group recognises a day-one gain/(loss) on the initial recognition of cross-currency and inflation-linked swaps held as hedging instruments where applicable. Cross- Inflation- Total currency linked swaps swaps Rm Rm Rm Loss at 31 March 2023 (1 497) (13) (1 510) Amortised to profit or loss 127 1 128 Loss at 30 September 2023 (1 370) (12) (1 382) Day-one (loss)/gain recognised (168) – (168) Amortised to profit or loss 135 2 137 Loss at 31 March 2024 (1 403) (10) (1 413) Day-one loss recognised (86) 48 (38) Amortised to profit or loss 142 (2) 140 (Loss)/gain at 30 September 2024 (1 347) 36 (1 311) 17 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 16. Material events subsequent to 30 September 2024 The following significant events occurred after 30 September 2024: 16.1 Changes in Exco The following changes occurred in Exco: • Ms PB Mngomezulu was appointed as group executive corporate services effective from 1 November 2024. The role incorporates procurement, legal as well as communications and stakeholder management functions. • Ms NY Hadebe was appointed as group executive strategy and sustainability effective from 1 November 2024. • Mr RA Crookes was appointed as group executive group capital effective from 1 November 2024. • Mr LM de Villiers was appointed as chief technology and information officer effective from 1 November 2024 (appointed on a three-year fixed term contract). • Mr AE Seema was appointed as group executive strategic delivery unit effective from 1 December 2024. • Mr RP Mnisi was appointed as group executive renewables effective from 1 February 2025. • Dr C Hartly was appointed as chief people officer effective from 1 March 2025. • Mr J Mthembu group executive legal and compliance resigned as a member of Exco on 31 October 2024 with the appointment of the group executive corporate services. • Ms J Sankar resigned as a member of Exco on 31 October 2024 with the appointment of the group executive corporate services. • Ms FS Burn resigned as a member of Exco on 31 October 2024 with the appointment of the chief technology and information officer. • Ms NN Sithole acted as group executive government and regulatory affairs until 31 October 2024. 16.2 Debt relief The Minister of Finance approved on 21 October 2024 the conversion to equity of the R8 billion debt relief support from government received on 28 June 2024. 16.3 Licences issued by NERSA NERSA issued two licences to Eskom Holdings SOC Ltd to operate solar photovoltaic generation facilities on 29 October 2024 for Sere and Lethabo solar photovoltaic power plants in the Western Cape and Free State. 16.4 Diesel rebate from SARS Eskom and SARS resolved the dispute relating to previously disallowed claims for fuel levy refunds on 18 October 2024 resulting in a net amount of R9.2 billion payable to Eskom and a total of R5.5 billion was received by January 2025. 16.5 Electricity Regulation Amendment Act The Electricity Regulation Amendment Act, 38 of 2024, was gazetted on 18 December 2024 with a commencement date of 1 January 2025. The Act provides for NERSA to consider the application and issue of licences, new generation capacity and electricity infrastructure. The Act also provides for the establishment of a transmission system operator to provide an open market platform that will allow for competitive electricity trading. NTCSA will fulfil the role of the transmission system operator in the interim from the effective date of the Act until the transmission system operator is established and must apply for the relevant licences to carry out the function for a period not exceeding five years. 16.6 EFC disposal An updated strategy for the disposal of EFC was approved by the investment and finance committee on 23 April 2024. A request for proposal was issued on 1 May 2024 with the preferred bidder approved by the investment and finance committee on 19 June 2024. A binding offer was received from African Bank Limited on 15 October 2024 and approved by the board on 25 October 2024, subject to PFMA approval. Approval for the transaction also needs to be obtained from the Competition Commission, Prudential Authority and the South African Reserve Bank. There was no accounting impact on the interim financial statements as the held-for-sale classification criteria in terms of IFRS 5 Non-current Assets Held-for-Sale and Discontinued Operations have not yet been met. 16.7 Payment arrangement with City of Tshwane Metropolitan Municipality Eskom and City of Tshwane concluded a payment arrangement for the settlement of R6.7 billion overdue debt over a five-year period on 26 November 2024. Interest will be suppressed for the duration of the payment arrangement, subject to settlement of current amounts receivable. The terms of the payment arrangement have been honoured to date. 16.8 Municipal debt write off National Treasury instructed Eskom on 16 December 2024 to write off one-third of the overdue ringfenced debt in terms of the municipal debt relief programme for five municipalities to the value of R3.0 billion within 30 days, even though these municipalities have not fully complied with the conditions of the municipal debt relief programme at the close of their first cycle. National Treasury also confirmed that where these municipalities were not maintaining their current accounts, the shortfall of R3.5 billion should be settled in four instalments from January 2025 to April 2025, failing which National Treasury will consider the removal of the municipality’s participation in the municipal debt relief programme. Eskom is engaging with National Treasury on the implications as these municipalities are not currently maintaining their current accounts. National Treasury submitted write-off instructions for a further five municipalities on 17 January 2025. These municipalities were compliant with the municipal debt relief programme and one-third of their debt to the value of R0.1 billion will be written off within 30 days. 18 17. Restatement of comparatives Eskom restated the financial statements at 30 September 2023 in line with the restatements that was done at 31 March 2024 because certain changes in the measurement of power station-related environmental restoration and mine-related closure, pollution control and rehabilitation provisions were incorrectly credited to profit or loss instead of deducted from the cost of the related generating plant and future fuel supplies assets in terms of IFRIC® 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities. This restatement reported in the September 2023 income statement therefore represents the movement for the six month period. Certain critical and strategic spares that met the definition of IAS 16 Property, Plant and Equipment were incorrectly classified as inventory. The September 2023 statement of financial position and income statement have been restated to correct the errors as follows: Previously reported Adjustments Restated Rm Rm Rm Group statement of financial position at 30 September 2023 Assets Non-current Property, plant and equipment and intangible assets 672 946 1 050 673 996 Land, buildings and facilities 8 670 – 8 670 Generating plant 381 126 (1 286) 379 840 Transmitting plant 49 111 – 49 111 Distributing plant 75 988 – 75 988 Spares and other 14 818 2 336 17 154 Equipment and vehicles 4 060 – 4 060 Work under construction 135 813 – 135 813 Intangible assets 3 360 – 3 360 Future fuel supplies 6 415 (1 656) 4 759 Deferred tax 16 719 795 17 514 Current Inventories 27 769 (2 336) 25 433 Equity Capital and reserves 238 242 (2 147) 236 095 Group income statement for the period ended 30 September 2023 Primary energy (85 089) 221 (84 868) Other expenses (17 252) (318) (17 570) Depreciation and amortisation expense (16 837) 91 (16 746) Profit before tax 2 250 (6) 2 244 Income tax (632) 2 (630) Profit for the year 1 618 (4) 1 614 The impacted notes to the interim financial statements have been updated where relevant because of the restatements. The restatements also resulted in various restatements in the segment reporting disclosures. The restatement had no overall impact on the statement of cash flows. 18. Exchange rates Unaudited Audited Unaudited 30 September 31 March 30 September 2024 2024 2023 Euro 19.24 20.51 19.92 United States dollar 17.28 18.98 18.83 Pound sterling 23.11 23.99 23.00 Japanese yen 0.12 0.13 0.13 19. Reportable irregularities There have been no significant changes to reportable irregularities as disclosed in the annual financial statements for the year ended 31 March 2024. 19 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Notes to the condensed group interim financial statements continued for the six months ended 30 September 2024 20. New standards and interpretations 20.1 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 – amendments The amendments specify how to assess whether a currency is No impact on the group as all to IAS 21 The Effects of Changes in exchangeable and how to determine the exchange rate when it is not. foreign currency transactions Foreign Exchange Rates The amendments clarify: are exchangeable. (1 January 2025) • when a currency is exchangeable into another currency • how a company estimates a spot rate when a currency lacks exchangeability • the disclosure requirements for users to understand the impact of the currency not being exchangeable These amendments have to be applied prospectively. Classification and measurement of The amendments specify: The group is assessing the financial instruments – amendments to • when a financial liability settled through an electronic payment impact of these classification IFRS 9 Financial Instruments and IFRS 7 system can be deemed to be discharged before the settlement date and measurement Financial Instruments: Disclosures • how to assess the contractual cash flow characteristics of financial requirements and will adopt (1 January 2026) assets with contingent features when the nature of the contingent them as required. event does not relate directly to changes in basic lending risks and costs • new or amended disclosure requirements relating to investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features that do not relate directly to basic lending risks and costs These amendments have to be applied prospectively. Contracts referencing nature- The amendments provide guidance on: The group is assessing the dependent electricity – amendments to • the ‘own-use’ exemption for purchasers of electricity under such impact of the requirements and IFRS 9 and IFRS 7 power purchase agreements will adopt them as required. (1 January 2026) • hedge accounting requirements for companies that hedge their purchases or sales of electricity using power purchase agreements • new disclosure requirements relating to contracts for nature- dependent electricity with specified characteristics These amendments have to be applied prospectively. Annual improvements volume 11 – The amendments include the following: The amendments are not amendments to IFRS 1 First-time • IFRS 1: clarifies hedge accounting wording inconsistencies with IFRS 9 expected to have a material Adoption of International Financial • IFRS 7: aligns the terminology and concepts with IFRS 13 Fair Value impact on the group and will be Reporting Standards, IFRS 7, IFRS 9, Measurement and updates the implementation guidance to simplify adopted as required if IFRS 10 Consolidated Financial Statements aspects of the requirements that are not illustrated applicable. and IAS 7 Statement of Cash Flows • IFRS 9: updates cross-references for derecognition of lease liabilities (1 January 2026) and aligns terminology with IFRS 15 Revenue from Contracts with Customers • IFRS 10: clarifies inconsistencies relating to judgement when determining whether a party is acting as a de facto agent • 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 Disclosure in IFRS 18 will replace IAS 1 Presentation of Financial Statements while The group is assessing the Financial Statements carrying forward many of the requirements in IAS 1 and introduces impact of these presentation (1 January 2027) new requirements relating to: requirements and will adopt • presentation of specified categories and defined subtotals in the them as required. statement of profit or loss • 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 assets between The amendments address the conflict between the guidance on No impact as the group is an investor and its associate or joint consolidation and equity accounting when a parent loses control of a currently not disposing of any venture – amendments to IFRS 10 and subsidiary in a transaction with an associate or joint venture. The investments in associates or IAS 28 Investments in Associates and Joint amendments require that the full gain be recognised, when the assets joint ventures. Ventures (optional adoption, effective transferred meet the definition of a business under IFRS 3 Business date deferred indefinitely) Combinations. 20 20.2 Standards, interpretations and amendments to published standards that are effective and applicable to the group Topic Summary of requirements Impact Supplier finance arrangements – The amendments introduce additional disclosure requirements for No impact as there are amendments to IAS 7 and IFRS 7 companies that enter into supplier finance arrangements. currently no supplier finance (1 January 2024) arrangements. 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 leaseback The amendments impact how a seller-lessee accounts for variable No impact as there are – amendment to IFRS 16 Leases lease payments that arise in a sale and leaseback transaction by currently no sale and leaseback (1 January 2024) specifying that a seller-lessee measures the lease liability arising from transactions. 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 current or The amendments clarify the requirements of determining if a liability No impact as there are non-current and non-current liabilities is current or non-current. The amendments clarify: currently no financial liabilities with covenants – amendments to IAS 1 • what is meant by a right to defer settlement with a right to defer settlement. (1 January 2024) • that a right to defer must exist at the end of the reporting period • that classification is unaffected by the likelihood that an 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. 21 ESKOM HOLDINGS SOC LTD Interim Financial Statements 2024 Appendix – abbreviations, acronyms and definitions Accounting, audit and other financial terms EBITDA Profit before depreciation and amortisation expense and net fair value and foreign exchange (loss)/gain IAS® Standards International Accounting Standard/(s) IFRIC® Interpretations International Financial Reporting Interpretations Committee Interpretations IFRS® Accounting Standards International Financial Reporting Standards as issued by the International Accounting Standards Board R Rand Rm Rand millions VAT Value Added Tax Accounting, audit and other financial terms IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 28 Investments in Associates and Joint Ventures IAS 34 Interim Financial Reporting IFRIC 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities 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 18 Presentation and Disclosure in Financial Statements Entities EFC Eskom Finance Company SOC Ltd Escap Escap SOC Ltd Eskom Eskom Holdings SOC Ltd Group Eskom Holdings SOC Ltd and its subsidiaries NTCSA National Transmission Company South Africa SOC Ltd Legislation Companies Act Companies Act, 71 of 2008 Eskom Debt Relief Act Eskom Debt Relief Act, 7 of 2023 Eskom Debt Relief Amendment Act Eskom Debt Relief Amendment Act, 5 of 2024 Electricity Regulation Amendment Act Electricity Regulation Amendment Act, 38 of 2024 PFMA Public Finance Management Act, 1 of 1999 Other Board Board of Directors CA(SA) Chartered Accountant of South Africa CFO Chief Financial Officer Exco Executive Committee IPP Independent Power Producer NERSA National Energy Regulator of South Africa OCGT Open Cycle Gas Turbine SARS South African Revenue Services 22 www.eskom.co.za