ANNUAL FINANCIAL STATEMENTS 2021

1 FINANCIAL S TATE M E NT S 31 March 2021 ANNUAL FINANCIAL STATEMENTS 2021 TOWARDS A NEW ENERGY FUTURECONTENTSD irectors report2 Nature of the business2 Overview of the year2 Operational performance3 FINANCIAL performance5 Governance and compliance10 Human resources12 Shareholder compact performance12 Reportable irregularities15 Events after the reporting date15 Approval15 Report of the audit and risk committee16 Statement by company secretary18 Independent auditor s report to Parliament and the shareholder Minister of Public Enterprises on Eskom Holdings SOC Ltd and its subsidiaries19 STATEMENTS of FINANCIAL position26 Income statements27 STATEMENTS of comprehensive income27 STATEMENTS of changes in equity28 STATEMENTS of cash flows29 Notes to the FINANCIAL STATEMENTS .

2 301 General information302 Summary of significant accounting policies303 Capital management and going concern414 Critical accounting estimates and assumptions435 FINANCIAL risk management496 Accounting classification and fair value657 Segment information698 Property, plant and equipment729 Intangible assets7410 Future fuel supplies7511 Investment in equity-accounted investees7512 Investment in subsidiaries7613 Deferred tax7714 Investments and FINANCIAL trading instruments7715 Loans receivable7816 Derivatives held for risk management7917 Finance lease receivables8218 Payments made in advance8219 Trade and other receivables8320 Inventories8421 Cash and cash equivalents8422 Assets and liabilities held-for-sale8423 Service concession arrangements8524 Share capital8525 Debt securities and borrowings8626 Embedded derivatives8827 Payments received in advance and contract liabilities and deferred income8828 Employee benefit obligations8929

3 Provisions9130 Lease liabilities9231 Trade and other payables9332 Revenue9333 Other income9434 Primary energy9435 Employee benefit expense9436 Impairment and writedown of assets9437 Other expenses9538 Depreciation and amortisation expense9539 Net fair value and foreign exchange gain/(loss)9540 Finance income9641 Finance cost9642 Income tax9643 Cash generated from operations9744 Net debt reconciliation9845 Guarantees and contingent liabilities9946 Commitments10047 Related-party transactions and balances10148 Events after the reporting date10249 Restatement of comparatives10350 Directors remuneration10451 New standards and interpretations10652 Information required by the Public Finance Management Act10953 Reportable irregularities and matters under investigation117 Appendix Abbreviations.

4 Acronyms and definitions121 Contact details123 ESKOM HOLDINGS SOC LTD | 1 The ANNUAL FINANCIAL STATEMENTS were prepared under the supervision of the chief FINANCIAL officer (CFO), C Cassim CA(SA). The FINANCIAL STATEMENTS have been audited in compliance with section 30 of the Companies Act and approved by the board of directors (board) on 23 August audited FINANCIAL STATEMENTS of the group and Eskom as at and for the year ended 31 March 2021 are available for inspection at the company s registered office and were published on 31 August 2021. The full suite of the group s externally published reports, including the FINANCIAL STATEMENTS and integrated report, are available at HOLDINGS SOC LTD | 32 | ANNUAL FINANCIAL STATEMENTS | 31 MARCH 2021 DIRECTORS REPORTfor the year ended 31 March 2021 The directors are pleased to present their report for the year ended 31 March of the businessEskom Holdings SOC Ltd (Eskom) is South Africa s primary electricity supplier that generates, transmits and distributes electricity to local industrial, mining, commercial, agricultural, redistributor (metropolitan and other municipalities)

5 And residential customers and to international customers in southern Africa. Eskom also purchases electricity from independent power producers (IPPs) and international suppliers in southern Africa. Eskom is a state-owned enterprise, with the minister of the Department of Public Enterprises (DPE) as the shareholder representative. The state is the only shareholder in s head office is in Johannesburg. The nature of the business of the significant operating subsidiaries is set out in note 12 in the ANNUAL FINANCIAL STATEMENTS . The business objective of these subsidiaries is mainly for the sole benefit of Eskom. Overview of the yearThe information in this report covers the group performance of Eskom Holdings SOC Ltd and its major operating subsidiaries, unless otherwise stated.

6 A high-level summary of the pertinent issues that characterised the year under review is presented below. Additional information, where relevant, is contained in relevant sections of the directors report, ANNUAL FINANCIAL STATEMENTS and integrated performance for the year was marked by the following key factors that had a negative impact on the business: system constraints that lead to loadshedding COVID-19 pandemic and the downgrade by credit rating agencies lack of cost-reflective tariffs continues to hinder long-term FINANCIAL sustainability liquidity constraints and unsustainable debt levels declining sales and an increase in overdue debtLoadshedding was required on 47 (2020.)

7 46) days during the year mainly due to high levels of unplanned load losses and planned maintenance combined with the need to conserve and replenish emergency reserves. Loadshedding remains the last resort to maintain the supply/demand balance and to avoid a catastrophic s Emergency Response Command Centre remains activated to coordinate Eskom s response to the COVID-19 pandemic and the related national lockdown. The lockdown badly affected electricity sales with a reduction of during the year. Eskom s operations were less affected by the lockdown as an essential service and were allowed to operate at full capacity at all levels of lockdown. The sovereign s credit rating remains at sub-investment grade level across all three internationally recognised credit rating agencies.

8 Moody s and Fitch downgraded the sovereign further in November 2020 due to South Africa s negative economic outlook and limited capacity to mitigate the fiscal impact of COVID-19. Liquidity and solvency risks continue to threaten Eskom s ability to achieve FINANCIAL and operational sustainability and to continue as a going concern. The lack of cost-reflective tariffs granted by the National Energy Regulator of South Africa (NERSA) as well as escalating municipal arrear debt contribute to the liquidity constraints. Eskom has restricted organisational cash requirements to improve liquidity through targeted savings on operating and capital expenditure.

9 Liquidity reserves declined to billion (2020: billion) in 2021. Key focus areas for liquidity include maintenance of an appropriate liquidity buffer, timing of the execution of the borrowing programme and successful execution of the turnaround plan. Access to funding in domestic and foreign markets has been restricted due to decreased investor confidence driven by poor FINANCIAL performance, saturated borrowing capacity, credit rating downgrades and uncertainty around Eskom s unbundling. The borrowing programme for 2022 to 2026 envisages Eskom raising debt of billion. Government continues to support Eskom to operate as a going concern and improve liquidity through support of billion received in 2021 and a further commitment of billion for 2022.

10 Although the government support addresses short-term liquidity requirements, it does not support long-term FINANCIAL sustainability. The only way to achieve that remains through cost-reflective tariff or a take-over of debt. Further government support will be required to alleviate the debt burden unless Eskom s tariff challenges are tariffs awarded by NERSA in recent years resulted in a substantial revenue shortfall. Eskom is following due process to seek rectification with regard to the unsustainable tariff determinations awarded, but it is a drawn-out process with no guaranteed relief. Eskom received favourable judgements from the High Court on NERSA revenue and regulatory control account (RCA) decisions during the increased by to billion in the current year despite a decrease of in sales volume.