Eskom group interim results for the six months ended 30 September 2020 14 December 2020 The results presentation is available at www.eskom.co.za/IR2020/interim Disclaimer This presentation does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy or subscribe for or underwrite or otherwise acquire, securities of Eskom Holdings SOC Ltd (Eskom), any holding company or any of its subsidiaries in any jurisdiction or any other person, nor an inducement to enter into any investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. This presentation does not constitute a recommendation regarding any securities of Eskom or any other person. Certain statements in this presentation regarding Eskom’s business operations may constitute “forward looking statements”. All statements other than statements of historical fact included in this presentation, including, without limitation, those regarding the financial position, business strategy, management plans and objectives for future operations of Eskom are forward looking statements. Forward-looking statements are not intended to be a guarantee of future results, but instead constitute Eskom’s current expectations based on reasonable assumptions. Forecasted financial information is based on certain material assumptions. These assumptions include, but are not limited to continued normal levels of operating performance and electricity demand in the Customer Services, Distribution and Transmission divisions and operational performance in the Generation and Primary Energy divisions consistent with historical levels, and incremental capacity additions through the Group Capital division at investment levels and rates of return consistent with prior experience, as well as achievements of planned productivity improvements throughout the business activities. Actual results could differ materially from those projected in any forward-looking statements due to risks, uncertainties and other factors. Eskom neither intends to nor assumes any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In preparation of this document certain publicly available data was used. While the sources used are generally regarded as reliable the content has not been verified. Eskom does not accept any responsibility for using any such information. 1 Overview of half-year performance COVID-19 has had a substantial impact, which will continue • As an essential service, Eskom was allowed to continue operating at full capacity even during level 5 of the national lockdown, with coal mines being allowed to operate to supply power stations • Priority was the supply of electricity as an essential service, and maintaining the safety of people • Non-essential staff have worked at home, with some staff returning to work as restrictions were lifted • Nevertheless, delays were experienced in executing capital and major maintenance projects due to lockdown restrictions on the movement of people • The most significant impact came from the reduction in demand during the earlier levels of lockdown  Sales volumes of 93TW year-to-date is 10.3% lower compared to prior period, with industrial sales volumes down 17.6%. Overall, sales volumes for 2021 are expected at 190TWh, almost 8% lower than 2020  Average demand was down 5 680MW during lockdown level 5, by 3 300MW during level 4, by 1 360MW during level 3, by 365MW during level 2, and 959MW in level 1, with many areas not returning to full production  Loadshedding was implemented on 19 days (July to September) due to high levels of breakdowns mainly during periods of particularly cold weather  Tragically, we have lost 34 employees and three contractors to the disease at 9 December 2020 3 Financial results for the period remain challenging… • Revenue of R108.7 billion (Sep 2019: R107.5 billion) despite a 8.76% tariff increase, with sales volumes 10.3% lower due to the impact of COVID-19 on economic activity and electricity demand • Growth in primary energy costs was stable at 4.4% – average purchase cost per ton of coal increased by only 4.6% (Sep 2019: 14.2%), offset by an increase in the use of diesel to minimise loadshedding • Employee benefit costs contained at R16.7 billion (Sep 2019: R16.4 billion, restated) through headcount reduction (including VSPs at managerial level) and managerial salary increases limited to 2.8% in October 2019 • EBITDA improved to R28.1 billion at an EBITDA margin of 25.82% (Sep 2019: R26.4 billion & 24.58%, restated) • Operating profit (EBIT) of R14.3 billion (Sep 2019: R13 billion, restated) under challenging conditions • Net finance cost of R15.3 billion due to the unsustainable debt burden, resulting in a net profit of R83 million • Government support of R6 billion received year-to-date to cover debt servicing and thereby support liquidity, with R56 billion committed for the 2021 financial year • Secured gross funding of R19.6 billion to September 2020, mainly from DFIs and local bond issuances 4 …although focus on priority areas is delivering results 5 Operational performance and outlook Operational performance is steadily improving • Plant availability at 67.86% for the period (Sep 2019: 69.91%), but up from 66.64% at March 2020 • Loadshedding implemented on 19 days during the period, compared to 46 days in the 2020 financial year • Planned maintenance has increased to 9.96% (Sep 2019: 8.86%) and unplanned maintenance reduced to 18.59% (Sep 2019: 19.81%), both also showing improvement since March 2020 • Current planned maintenance at about 15% with 11 units ≈ two entire power stations under maintenance • Normalised coal stock up to 58 days (Sep 2019: 54 days), with 65 days expected by 2021 year end • Total of R2.7 billion spent during the period on Eskom and IPP diesel-generated power during the period, with forecast cost for the full year 30% lower than prior year • Transmission network performance has returned to expected levels, Distribution performance remains stable • More assertive approach to distribution energy loss prevention and debt collection is delivering results • Kusile Unit 2 achieved commercial operation on 29 October 2020, with Unit 3 on track for commercial operation by March 2021 and Medupi Unit 1 by July 2021 • Medupi design modifications successfully implemented on four units to date, with the fifth unit in progress • Particulate emissions performance has improved significantly, with water usage levels remaining stable 7 Koeberg overview • Eskom and South Africa has a proven track record and infrastructure to run nuclear power plants, with Koeberg being in operation since 1984. During this time, Koeberg continued to operate safely • Both Koeberg units are running at full power, with the second unit recently having safely returned from its 24 th refuelling outage • Koeberg remains an extremely reliable generating option with the lowest primary energy costs  Eskom proposes extending the life of Koeberg for an additional 20 years to 2045, in line with the IRP 2019 expectations for energy security beyond 2024  The extension of Koeberg is economically viable (compared to the cost of new build) and will secure 1 860MW for another 20 years  It includes the replacement of Koeberg’s six steam generators. The first three steam generators were delivered to site from September 2020 8 Environmental performance declines, with stable socio-economic and safety performance • Particulate emission performance has improved to Environmental performance kg/MWh l/kWh 0.35kg/MWhSO (Sep 2019: 0.50kg/MWhSO), with water sent out Relative particulate emissions Water consumption sent out consumption stable at 1.41l/kWhSO (Sep 2019: 1.39l/kWhSO) 0.50 1,45 0.45 • Cooperating with authorities on criminal charges at Kendal, 1,40 0.40 with disciplinary action being instituted 0.35 1,35 • 63 909 new households connected (Sep 2019: 77 679), with 0.30 1,30 lockdown restrictions causing delays 0.25 1,25 • Lost-time injury rate improved to 0.24 (Sep 2019: 0.31) 0.00 1,20 Sep Sep Sep Sep Mar Sep 2016 2017 2018 2019 2020 2020 • Sadly, two employee and eight contractor fatalities recorded during the period (Sep 2019: four contractors). These fatalities Safety performance were not due to COVID-19, but related to operations Number Fatalities (employees & contractors) LTIR Index 10 0,40 • Preferential procurement spend improved slightly to 64.62% 8 0,30 (Sep 2019: 60.94%) 6 • Racial equity has improved substantially compared to prior 4 0,20 period, while gender equity remained stable. Disability equity 2 0,10 deteriorated slightly against the prior period 0 0,00 Sep Sep Sep Sep Mar Sep 2016 2017 2018 2019 2020 2020 9 Business separation overview • DPE’s “Roadmap for the Reform of Eskom in a Changing Energy Supply Industry” has set timelines for the restructuring of Eskom from a vertically integrated utility to an unbundled state with three wholly owned separate legal entities in the form of Transmission, Generation and Distribution as follows:  Divisionalisation by March 2020, and functional separation by March 2021  Legal separation of the Transmission entity by December 2021  Legal separation of the Generation and Distribution entities by December 2022 • Divisionalisation was completed by March 2020 as a first step towards business separation, with functional separation to be completed by March 2021 • Separate Transmission subsidiary is still targeted by December 2021, with Generation and Distribution by December 2022 10 Several divisionalisation milestones have been achieved Launch the three separated divisions  Design the operating model  Set out the trading model  • Divisional boards and MDs in place • Design ”functional leader” model • Transfer pricing implemented • About 9 400 staff relinked to divisions • Roles and accountabilities finalised • Allocation of costs, assets and products • System-driven income statements, balance • Divisional organisational structures • Internal power purchase and electricity sheet and cash flow statements in place approved supply agreements in place • Cost centres and profit centres allocated • Internal trading processes and • High-level business models designed governance structures in place What will be done between now and March 2021 – to achieve functional separation • Divisional business models finalised • Engagements with organised labour • Conclude on transfer pricing principles • Governance structures in place • Communication and change • Allocation of costs, assets and products • Core processes and interfaces defined management • Finalise internal power purchase and • Implement final organisational electricity supply agreements structures 11 Separation of the Transmission entity • The establishment of the Transmission entity is regarded as a key step in delivering on the mandate of the DPE Roadmap • All key milestones for functional business separation have been achieved, except for the organisational structure. At its November 2020 meeting, the Transmission divisional board discussed and referred the structure to the next meeting for final adoption • PFMA application for the establishment of the Transmission entity was submitted to DPE and National Treasury in November 2020. We received Government’s response in December • Principles for Distribution-Transmission asset demarcation were defined and agreed upon. Sign-off of the asset demarcation principles and the identified assets for transfer is in progress • The process of legal separation has many internal and external dependencies. These areas include licence transfers and applications, policy and regulatory reforms, as well as legal and financial dependencies • The operationalisation of the Transmission entity will culminate in the transfer of assets, secondment of staff and transfer of contracts 12 Financial performance and outlook Continuing to drive Eskom’s financial turnaround • We continue to drive the turnaround strategy to improve the income statement and optimise the balance sheet:  Pursuing revenue certainty from sales growth opportunities and migration towards cost-reflective tariffs  Delivering sustainable cost optimisation and efficiencies in operational and capital costs  Reducing our reliance on debt and containing debt service costs with the assistance of Government  Pursuing all available avenues to recover amounts due to Eskom • COVID-19 has hindered progress in some of these areas through an unprecedented decline in sales due to national lockdowns and the global economic recession • Since March, both the Sovereign and Eskom’s credit ratings have been downgraded twice by Moody’s and Fitch • Municipal arrear debt continues to grow, now standing at R32.9 billion. Non-technical losses, such as electricity and equipment theft, are more pervasive amidst the recession, further threatening liquidity through lower revenue • RCA applications and court interventions are under way to address the tariff. We await determinations on timing of recovery from favourable court judgments and the outcome of NERSA’s appeal on the R69 billion for MYPD 4 • It should be noted that financial performance in the first half of the year is historically better than the second half, as the winter period is subject to higher tariffs and sales, together with lower primary energy and maintenance 14 Most indicators improved slightly despite very challenging conditions, yet remain well below acceptable levels Unaudited Restated 1 Profitability Sept Sept R billion EBITDA margin, % Net profit after tax, R billion % Ratio 2020 2019 40 EBITDA, R billion 34 32 Revenue, R million 108 723 107 502 30 30 20 EBITDA, R million 28 075 26 428 28 10 26 Operating profit (EBIT), R million 14 254 12 953 0 24 -10 Net profit/(loss) after tax, R million 83 (1 930) 22 -20 20 EBITDA margin, % 25.82 24.58 -30 18 Sep-16 Sep-17 Sep-18 Sep-19 Mar-20 Sep-20 Cash interest cover, ratio 1.00 1.02 Solvency Debt service cover, ratio 0.44 0.64 Cash from operations, R billion Debt service cover ratio Ratio Cash interest cover ratio R billion Gross debt/EBITDA, ratio 18.34 19.22 3,0 40 Debt/equity (including long-term provisions), 2,5 35 2.53 2.94 30 ratio 2,0 25 Gearing, % 72 75 1,5 20 Free funds from operations (FFO) 1,0 15 6.25 6.07 10 as % of gross debt 0,5 5 Performance improved Performance declined 0,0 0 Sep-16 Sep-17 Sep-18 Sep-19 Mar-20 Sep-20 1. Restatements are disclosed in note 17 of the interim financial statements 15 COVID-19 was detrimental to revenue and earnings, but small profit achieved through improved cost control Unaudited Restated 1 • Revenue: 8.76% tariff increase, nearly fully Income statement Sept Sept YoY % eroded by unprecedented decline in R million 2020 2019 change electricity demand from COVID-19 Revenue 108 723 107 502 1 • Primary energy cost: Eskom production Other income 637 677 declined substantially to meet lower demand, Primary energy (54 318) (52 018) (4) however, higher OCGT utilisation, IPP Net employee benefit expenses (16 676) (16 448) (1) production and imports. Increase in average Net impairment reversal/(loss) 102 (954) coal purchase cost per ton limited to only Other expenses (10 393) (12 331) 16 4.6% since March 2020 (Sep 2019: 14.2%) EBITDA (before net fair value loss) 28 075 26 428 6 • Employee benefit cost: headcount Depreciation and amortisation expenses (13 821) (13 475) (3) reduction through attrition and limits on Operating profit (EBIT) 14 254 12 953 10 managerial increases, offset by three-year Net fair value gain/(loss) on financial wage settlement agreement 1 145 (480) instruments and embedded derivatives • Other expenses: well contained through Net finance cost (15 332) (15 025) (2) cost curtailment efforts; restatement of Share of profit of equity-accounted investees 47 40 R4 billion in 2019 relating to Kusile Profit/(loss) before tax 114 (2 512) • Finance costs: higher indebtedness, Income tax (expense)/credit (31) 582 coupled with lower capitalisation of interest Net profit/(loss) for the period 83 (1 930) 1. Restatements are disclosed in note 17 of the interim financial statements 16 Unprecedented decline in sales of 10.7TWh year-on-year, electricity revenue stagnant despite 8.76% tariff increase Sept Sept YoY % 2020 2019 change • Reduction in sales across all customer categories, with the Revenue, R million industrial sector most affected by a 17.6% decline due to the economic downturn and depressed commodity prices Local 108 923 108 568 – • IFRS 15 applies the cash basis for defaulting customers, International 5 163 6 151 (16) negatively impacting revenue due to greater socio-economic Gross electricity challenges brought about by COVID-19 114 086 114 719 (1) revenue • Less capitalisation of revenue from units in pre- Net revenue not (4 639) (4 145) (12) commissioning phase due to lower production recognised (IFRS 15) Total electricity revenue 109 447 110 574 (1) Sales and revenue Other revenue 649 1 134 (43) R billion Sales, TWh Revenue, R billion TWh Capitalised (1 373) (4 206) 67 120 110 Total revenue 108 723 107 502 1 100 105 80 100 60 95 Sales, GWh 40 90 Local 86 903 96 640 (10.1) 20 85 International 6 485 7 476 (13.3) 0 80 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Total sales 93 388 104 116 (10.3) 17 Energy produced reduced by 9TWh to meet lower demand, overall cost increased through more expensive sources Sept 2020 Sept 2019 R/MWh Cost, Sent out, Unit cost, Cost, Sent out, Unit cost, YoY % R million GWh R/MWh R million GWh R/MWh change Coal and other 1 36 227 94 047 385 36 026 98 037 367 (5) Nuclear 461 4 374 105 732 7 564 97 (9) OCGTs 2 1 391 496 2 811 1 100 331 3 327 15 Eskom generation 3 38 079 98 917 385 37 858 105 932 357 (8) Renewable IPPs 12 456 5 551 2 244 11 241 5 220 2 153 (4) IPP OCGTs 4 1 259 291 3 648 926 169 4 389 17 Total IPPs 3 13 715 5 842 2 314 12 167 5 389 2 223 (4) Imports 3 2 524 4 474 564 1 993 3 703 538 (5) Primary energy 54 318 109 233 497 52 018 115 024 452 (10) Performance improved Performance declined 1. Excluding Medupi and Kusile pre-commissioning production of 1 845GWh (Sept 2019: 5 099GWh) 2. OCGT cost comprises fuel, start-up cost and storage and demurrage charges 3. Note that the unit cost of IPPs and international purchases is based on the full cost of operation, whereas the unit cost of Eskom-owned generation is based only on the primary energy cost. Given that IPP and international purchases are treated as a variable cost in Eskom’s accounts, this treatment is considered appropriate 4. The IPP OCGT unit cost is calculated on fuel cost (variable cost) only, and excludes maintenance and capacity charges. Maintenance is included in the total cost shown 18 Balance sheet stabilised through Government support Unaudited Audited Restated 1 Sept March Sept YoY % Financial position, R million 2020 2020 2019 change Property, plant and equipment and intangible assets 2 659 959 657 189 654 457 1 Working capital – inventory and current receivables 66 352 57 563 59 435 12 Liquid assets – cash and cash equivalents and investments 24 929 34 971 19 010 31 Derivatives held for risk management 36 856 57 636 28 104 31 Other assets 3 16 149 15 580 16 322 (1) Total assets 804 245 822 939 777 328 3 Equity 4 186 870 185 863 162 419 15 Debt securities and borrowings 463 703 483 682 454 207 2 Working capital – current payables 51 530 54 904 48 670 6 Derivatives held for risk management 5 475 2 941 5 773 (5) Other liabilities 5 96 667 95 549 106 259 (9) Total equity and liabilities 804 245 822 939 777 328 3 1. Restatements are disclosed in note 17 of the interim financial statements 2. Includes Eskom group funded capital expenditure of R10.8 billion (Sep 2019: R10.4 billion; Sep 2018: R16.2 billion), which has been contained in recent years to improve liquidity 3. Mainly comprises assets held for sale and future fuel 4. Includes Government support of R6 billion received out of R56 billon committed for the year (Sep 2019: R13.5 billion received; Mar 2020: R49 billion received) 5. Mainly comprises non-current provisions, employee benefit obligations, contract liabilities and lease liabilities 19 Reliance on debt remains unsustainable, with gross finance costs the second largest cost after primary energy Unaudited Restated 1 Sept Sept YoY % • Debt of R13 billion raised during the Group debt overview, R million 2020 2019 change period, offset by debt repayments of Debt securities and borrowings 463 703 454 207 2 R24 billion (excluding commercial Net market making liabilities 20 19 5 paper) Cash and cash equivalents 2 (11 774) (7 814) 51 • Growth in debt securities and borrowings is largely attributable to Net derivatives held for risk management 2 (31 381) (22 331) 41 foreign denominated borrowings and Net interest-bearing debt 420 568 424 081 (1) movement in the exchange rate • Average cost of debt increased to Group finance cost overview, R million 9.89% (Sep 2019: 9.58%) Gross finance cost 23 159 24 451 5 • Despite COVID-19’s greater economic uncertainty, the impact of interest rate Finance income (1 091) (1 258) (13) and currency risk on our existing debt Borrowings capitalised to assets (6 736) (8 168) (18) has been limited due to comprehensive Net finance cost 15 332 15 025 2 hedging of market exposures 1. Restatements are disclosed in note 17 of the interim financial statements 2. In the table above, assets are reflected as negative amounts 20 Secured 64% of planned and 48% of anticipated funding for the year, by 30 September 2020 Funding Committed Guarantee utilisation allocation at 30 September 2020 plan and signed R billion R billion 2021 1 2021 350 DFIs 12.4 11.7 ECAs 0.6 0.6 304 International bonds – – Domestic bonds and notes >1 year 5.1 5.1 21 25 Domestic bonds and notes ≤1 year 2.9 1.2 Total Government Drawn down Committed not Available Structured products 8.2 – guarantee drawn down Bank funding 1.5 1.0 Debt maturity profile at 30 September 2020 3 Funding 30.8 19.6 R billion Interest Capital Additional anticipated funding 9.9 – 36 Total anticipated funding 2 40.7 19.6 31 % secured 48% 28 25 23 58 Debt servicing costs of R94 billion for 2021, reducing to 39 32 31 36 R70 billion in 2022, and averaging around R60 billion per year to 2025 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 1. Funding sources targeted for 2021 are subject to change depending on requirements 2. Gross of commercial paper 3. Based on existing debt only, using forward rates and net of21 swaps Without Government support, cash from operations remains insufficient to meet debt servicing Cash flows for the six months ended 30 September 2020, R billion 109 Cost savings alone is not the answer – Primary energy, R17 billion savings amounts to 23% of (38) controllable controllable operational outflows of approximately R74 billion for the six months. A cost-reflective tariff is required to ensure Primary energy, (16) non-controllable1 long-term financial sustainability Debt servicing to date of R43 billion comprised: (17) Employee benefits Capital of R24 billion Debt service gap of (13) Working capital Interest of R19 billion ±R17 billion Repairs, maintenance (6) and operations without support (90) 19 (19) – Government 13 support of (6) (24) (6) R6 billion was received to date, (17) to alleviate some Revenue Operating Operating Interest Balance Capital Balance Debt raised Debt repaid Debt cashflows surplus repaid before expenditure before service gap of the cash flow investing and other funding pressure investing 1. Non-controllable primary energy includes renewable IPP costs and environmental levies 22 Arrear municipal debt continues to escalate, adding to liquidity pressure Invoiced municipal arrear debt R billion % • Invoiced municipal arrear debt (including interest) grew by Municipal payment levels, % Arrear municipal debt, R billion +17% R4.9 billion since March 2020, to R32.9 billion 35 90 30 • Payment level of 80% by municipalities (excluding metros), 85 25 with slight improvement year-on-year (Sep 2019: 79%) 20 80 15 28,0 32.9 • Payment level of 49% for top 20 defaulting municipalities, 25,1 10 12,4 17,0 75 with some progress achieved from our municipal debt 5 9,2 0 70 management strategy, as well as ring-fencing of arrear Sep-16 Sep-17 Sep-18 Sep-19 Mar-20 Sep-20 accounts, leading to lower interest charges Soweto small power user (SPU) debt • We continue to collaborate with the Eskom Political Task R billion % Soweto SPU payment levels, % Soweto SPU arrear debt, R billion Team and Multi-disciplinary Revenue Committee to 25 Debt write-off, R billion +1% 25 address municipal debt challenges. A structural solution is 20 3,6 20 required, along with continued oversight by Government 7,9 7,8 15 15 • Invoiced Soweto SPU arrear debt (including interest) 10 16,8 10 decreased to R13.2 billion (Sep 2019: R16.1 billion), due 16,1 14,1 13,2 5 11,7 12,8 5 to write-off of in duplum components 0 0 • Only two large customers, with combined debt of Sep-16 Sep-17 Sep-18 Sep-19 Mar-20 Sep-20 R0.7 billion, owe amounts in excess of R100 million 1. Soweto debt prior to 2019 includes in duplum components that were not written off at the time 23 Process to manage irregular, fruitless and wasteful expenses improved, more initiatives under way Movement in irregular expenditure at 30 September 2020 • Slow progress on condonation of irregular R billion 34.6 – – expenditure. Until condoned, expenditure on affected 0.2 contracts will remain irregular • National Treasury has established a standing 1.2 committee with DPE to expedite the condonation of historical items, which account for most of the reported irregular expenditure 33.1 0.2 • The new Loss Control Department will address PFMA violations and oversight of consequence Opening Prior year Existing IE New IE Condoned Recovered Closing balance (clean-up) (2021) balance management, including disciplinary actions, condonations and recovery of losses New irregular expenditure Number R million • A procurement roadmap is being implemented to Tender process and DoA 6 156 enhance internal procurement processes as well as Other 1 – contract management to address audit findings and Total 7 156 support operations 24 Performance in the second half historically erodes profit achieved during the first half due to seasonality Actual Projection Actual • A loss after tax is anticipated for the full Sept March March Financial outlook 2020 2021 2020 year which will be worse than 2020 due Revenue, R million 108 723 201 574 199 468 to COVID-19. We project to perform better than budget due to green shoots EBITDA, R million 28 075 27 709 36 998 from our turnaround strategy Operating profit/(loss) (EBIT), R million 14 254 (648) 9 219 • Savings of R14.1 billion targeted for the Net profit/(loss) after tax, R million 83 (22 055) (20 502) year, with R5.2 billion already achieved EBITDA margin, % 25.82 13.75 18.55 • Demand is unlikely to recover to pre- Cash interest cover, ratio 1.00 0.52 0.94 COVID-19 levels due to the economic recession. Sales are expected to be Debt service cover, ratio 0.44 0.18 0.52 15.7TWh lower than prior year and Gross debt/EBITDA, ratio 18.34 18.18 14.39 likely to stagnate at 190TWh for the Debt/equity (including long-term next few years 2.53 2.18 2.45 provisions), ratio Free funds from operations (FFO) • We are working with Government to 6.25 6.51 7.26 explore avenues to stimulate sales for as % of gross debt the benefit of the economy Without Government support, cash from operations remains insufficient to service debt. However, some solvency ratios are expected to improve by Performance improved Performance declined year end mainly due to the Government support Positive trend forecast Negative trend forecast 25 A structural solution is required to ensure financial sustainability • In the 2020 Medium-Term Budget Policy Statement, Government reaffirmed its commitment to stabilising Eskom’s balance sheet, with financial support of R225.8 billion up to the 2026 financial year, at a cost that the country simply cannot afford • Government support does not lead to an improvement in our income statement nor an immediate reduction in debt. It is mostly used to settle interest obligations with little remaining to settle the debt principal • Using current tariffs, the separated Generation, Transmission and Distribution entities will be in a similar loss-making position Government financial support Generation Transmission Distribution Projection Projection Projection R billion 225.8 March March March 56,0 R million 2021 2021 2021 49,0 External revenue – 9 188 196 012 31,8 Net transfer pricing adjustment 133 174 37 870 (174 434) 21,9 21,1 23,0 23,0 Allocated revenue 133 174 47 058 21 578 EBITDA 19 474 5 649 (1 008) Operating (loss)/profit (EBIT) (1 007) 2 582 (5 003) 2020 2021 2022 2023 2024 2025 2026 Total (Received) (Assumed) (Assumed) Net loss before tax (24 652) (2 861) (6 833) The price of electricity in South Africa must migrate towards a cost-reflective tariff that covers prudent and efficient costs to ensure the long-term viability of the electricity supply industry and restore Eskom’s independent financial sustainability 26 The results presentation is available at www.eskom.co.za/IR2020/interim