1. 1 ESKOM ANNUAL RESULTS 2003 & CORPORATE OBJECTIVES 2004 - A PRESENTATION TO THE PORTFOLIO COMMITTEE ON PUBLIC ENTERPRISES THULANI S. GCABASHE CHIEF EXECUTIVE 27 OCTOBER 2004

2. 2 ESKOM GROUP Eskom Group Eskom Holdings Limited Subsidiaries Eskom Enterprises (Pty) Ltd Eskom Finance Company (Pty) Ltd Escap Limited Gallium Insurance Company Limited Regulated Business Generation Division Transmission Division Distribution Division Key Sales and Customer Service Division Four corporate divisions

3. 3 ESKOM GOVERNANCE Continued emphasis on good corporate governance and compliance with King II Promoting corporate values: –Excellence –Integrity –Innovation –Customer satisfaction

4. 4 SOCIO-ECONOMIC FINACIAL PEOPLE,SAFETY, HEALTH & ENVIRONMENT TECHNICAL Electrification Black economic empowerment Plant availability Plant reliability System minutes People measures HIV / Aids Eskom fatalities Specific water consumption Relative particulate emissions Profit before tax Return on assets Debt:equity SUSTAINABLE DEVELOPMENTCUSTOMERCUSTOMER World industrial electricity prices Sales volumes

5. 5 ESKOM Holdings Ltd SOCIO -ECONOMIC

6. 6 IN 2003 ESKOM HAS DELIVERED Electrified an additional 175 396 homes (2002: 205 371 homes) Eskom group procured goods and services to the value of R7.3bn from black economic empowered enterprises (2002: R5.5bn)

7. 7 ELECTRIFICATION CUMULATIVE NUMBER OF HOMES ELECTRIFIED 175 396 Electrified our 3 millionth customer in Feb 2004

8. 8 BLACK ECONOMIC EMPOWERMENT R’m Spent R20.6bn since 1998 Spent R714m with black women owned enterprises since 2002 Coal

9. 9 ESKOM Holdings Ltd PEOPLE, SAFETY, HEALTH & ENVIRONMENT

10. 10 PEOPLE MEASURES Actual 2003Actual 2002 HR Sustainability Index91.8% 89.8% Equity targets –Racial equity 56.3%54.6% –Gender equity 27.8%24.5% –Disable persons 1.4% 0.16%

11. 11 EMPLOYMENT EQUITY (MANAGERIAL AND SUPERVISORY CATEGORIES) % 8.8 Racial equityGender equity 10.4

12. 12 EDUCATION AND TRAINING Invested R 505m in the development and training of employees 1 850 bursars supported –87% black –50% women –455 black bursars and trainees completed training

13. 13 SAFETY Reduction in public electrical fatalities from 24 to 20 Lowest number of work related fatalities in 30 years Disabling injury incident rate continues to improve from 0.45 to 0.37

14. 14 MANAGING THE IMPACT OF HIV/AIDS HIV/AIDS continues to be a focus area The group contributed R 67m to date to the development of a vaccine Continued education and awareness programmes with special focus on voluntary confidential counselling and testing

15. 15 ENVIRONMENTAL PERFORMANCE Eskom’s commitment to be ISO 14001 compliant was achieved Contraventions reported in terms of the operational sustainability index reduced from 3 to 2

16. 16 RELATIVE PARTICULATE EMISSIONS Achieved 5 year target set in 1998 Current emissions 0.28 kg/MWh sent out kg/MWh

17. 17 SPECIFIC WATER CONSUMPTION 70% wet cooled technology Consumed 271 940 M l of raw water Specific water consumption of 1.29l/kWh Impacted by the change in the mix of stations l/kWh SO

18. 18 ESKOM Holdings Ltd TECHNICAL PERFORMANCE

19. 19 SUSTAINABILITY INDEX The operational sustainability index is a composite measure used to ensure the long-term sustainability of technical performance.

20. 20 TECHNICAL PERFORMANCE Unit Capability Factor (UCF) Unplanned Automatic Grid Separations (UAGS) -- International median Availability (%) Reliability (Number)

21. 21 TECHNICAL PERFORMANCE Unplanned Capability Loss Factor (UCLF) System Minutes Lost (SML) Percentage Minutes (<1SML)

22. 22 KEY SUSTAINABILITY INITIATIVES Approved the Eskom sustainability strategy and performance index Continued participation in the United Nations Global compact Partnerships –Endangered Wildlife Trust –Endangered and Environmental Society of South Africa (WESSA) Key research projects in support of sustainable development

23. 23 RESEARCH AND DEVELOPMENT Invested R 558m in research projects

24. 24 ESKOM FINANCIAL PERFORMANCE

25. 25 FINANCIAL Group profit after tax at R3.5bn (2002: R3.7bn) Group financial health continued to improve as measured by debt equity (Improved from 0.46 to 0.30) 4.8% electricity sales growth (2002: 3.5% ) Total productivity was positive to the extent of R613m or 2.5% (2002:1.6%, R382m)

26. 26 FINANCIAL Impact of prudent accounting Impairment due the delay in issuing the license for the Second National Operator (R649m) Provision for investment in Telecoms Lesotho (R154m)

27. 27 FINANCIAL Group return on total assets declined from 13.07% to 10.35% Eskom Holdings real rate of return declined from 1.69% to 0.53%

28. 28 R’m GROUP PROFIT BEFORE TAX Impact of adjustments

29. 29 GROUP INCOME STATEMENT

30. 30 GROUP BALANCE SHEET

31. 31 Ratio DEBT : EQUITY 0.3

32. 32 GROUP CASH FLOW STATEMENT

33. 33 ESKOM CORPORATE OBJECTIVES 2004

34. 34 FINANCIAL OBJECTIVESINDICATORSMEASURESTARGET 2004 Improving the management of resources  Long term financial viability.  Business sustainability.  Economical, efficient and effective usage of resources.  Focus on customer satisfaction.  Excellent technical performance.  Continued focus on affirmative action and actively promoting women and disability equity.  Net income after interest and before fair value adjustment Budget (R‘m)4 212  Net income after taxation Budget (R‘m)2 781  Debt: equity (including long-term provisions) Financial Plan0.56  Historic cost return on total assets Financial Plan8.61  Productivity improvement for the year Budget %1  Human resources sustainability index Index80  Customer satisfaction index Index75  Operational sustainability index Index80  Black management, professional and supervisory staff at 31 December Target %57,9  Women management, professional and supervisory staff at 31 December Target %29.1  Disabled employees Target %1.9  Procurement expenditure and supply of services, both capital and operating: - Black economic empowerment (50% discretionary expenditure) Target (R‘m)7 465 - Women empowerment (> 5% of BEE amount)Target (R‘m)521

35. 35 ENVIRONMENTAL OBJECTIVESINDICATORSMEASURESTARGET 2004 Environmental (Demonstrating exemplary corporate commitment to a sustainable environment)  Contravention of environmental legislation  Specific water consumption.  Relative particulate emissions. Number l/kWh sent out target kg/MWh sent out target 0 1.28 0.27

36. 36 SOCIAL OBJECTIVESINDICATORSMEASURESTARGET 2004 (Demonstrating exemplary corporate citizenship and harmony with society)  Support for socio- economic development.  Support for NEPAD  Expenditure of Eskom Development Foundation (ESDEF) Budget (R’m)42  Expenditure on projects to encourage electricity development in Africa (Westcor) ApprovedUSD100 000  Eskom financial contribution to AIDS vaccine development research. BudgetR15 million  Eskom contribution to advanced AIDS training for medical practitioners. BudgetR2 million  Employees enrolled in E-vision management development program Employees Targeted 2000

37. 37 REVISED BUSINESS MODEL OBJECTIVESINDICATORSMEASURESTARGET 2004 (Demonstrating progress towards achieving Eskom's intended business model)  Diversification and growth of markets, products and services.  Restructuring Eskom to support the strategic intent and align with Government policy.  Expenditure on diversification and market growth.  Market related, risk adjusted return on new investment as approved per investment  Implementation of Government’s ESI/EDI restructuring policies and plans within Eskom’s control executed  Implementation of internal restructuring milestones and plans towards Eskom’s strategic intent -Generation cluster subsidiaries -Generation BEE sale -SAPEX -EDI preparation -Repositioning of Eskom Enterprises Budget (R’m) Investment return require- ment matrix Government policies & plans Key milestones & target dates 20 Individual projects within agreed limits Achievement Achievement of dates

38. 38 CONCLUSIONS During the first decade of democracy, Eskom has:  Delivered on its developmental mandate  Sustained financial performance  Delivered world class technical performance  Practiced sound corporate governance  Become a global player of note There are significant key challenges ahead. Eskom is ready for the challenge and the next decade of delivery!

39. 39 ESKOM Holdings Ltd The End