CONTENTS

1 CONTENTS . IFC Performance overview 2 About this report 3 Our business and strategy 4 Chairman's statement Integrated report 8 Our business model 16 Ethical leadership 31 March 2018. 28 Operating environment 32 Strategy and outlook 36 Stakeholder engagement and material matters 40 Risks and opportunities, assurance and controls 47 Our governance 48 Governance framework 48 Board of Directors and committees 53 Executive Management Committee 54 Executive remuneration and benefits 60 Financial review 61 Chief Financial Officer's report 66 Value added statement 67 Condensed annual financial statements 70 Our finances 83 Operating performance 84 Chief Executive's review 89 Our infrastructure 98 Our interaction with the environment 108 Our people 117 Our role in communities 123 Our know-how 126 Supplementary information 127 Abbreviations and glossary of terms Integrated report | 31 March 2018.

2 130 Independent sustainability assurance report 134 Leadership qualifications and directorships 137 Board and Exco meeting attendance 139 Environmental implications of using electricity 140 Statistical tables 146 Plant and benchmarking information 153 Customer information 155 Contact details 156 Our suite of reports Integrated report Annual financial statements Foundation report 31 March 2018 31 March 2018 31 March 2018. Achieving sustained success Achieving sustained success Achieving sustained success Achieving sustained success 1923 - 2018. NAVIGATION ICONS. The following navigation icons are used to link our strategy and resources to material matters, strategic risks, key performance indicators and performance: FC. Our finances (financial capital). MC. Our infrastructure (manufactured capital). NC. Our interaction with the environment (natural capital).

3 PERFORMANCE HIGHLIGHTS FOR THE YEAR. HC. Our people (human capital). SRC. Our role in communities (social and relationship capital) New Board appointed in Excellent Transmission IC. Our know-how (intellectual capital). January 2018 performance Request for feedback We want to ensure that our report continues to provide relevant information to stakeholders. We R20bn 27 IPP. welcome your feedback on ways in which we could facility signed to contracts signed improve our report in future. Please send your suggestions to improve liquidity Information block Additional information or case study in the integrated report cost Significant Environmental Supplementary information provided Information available online containment performance and OUR VALUES. efforts LTIR improved in a fact sheet A list of abbreviations and glossary of terms are available at the back of this report on significantly Zero Harm Sinobuntu (Caring).

4 Pages 127 to 129. 3 new 215 519 Integrity Customer Satisfaction build units Throughout this integrated report, performance against target is indicated as follows: electrification commissioned connections Innovation Excellence Actual performance met or exceeded target Actual performance almost met target (within a 5% threshold). Actual performance did not meet target SC. Indicates that a key performance indicator is included in the shareholder compact JOINT VENTURE [0001]. ABOUT THIS REPORT. Board responsibility and approval The Board is accountable for the integrity and completeness of the integrated report and any supplementary OUR BUSINESS AND STRATEGY. information, and is assisted by the Audit and Risk Committee and the Social, Ethics and Sustainability Committee. The Board has applied its collective mind to the preparation and presentation of the integrated report and has concluded that it is presented in accordance with the International <IR> Framework.

5 Considering the completeness 4 Chairman's statement of the material items dealt with and the reliability of information presented, based on the combined assurance 8 Our business model process followed, the Board approved the 2018 integrated report, annual financial statements and supplementary 16 Ethical leadership information on 2 July 2018. 28 Operating environment 32 Strategy and outlook 36 Stakeholder engagement and Mr Jabu Mabuza Ms Sindi Mabaso-Koyana Prof. Malegapuru Makgoba material matters Chairman Chairman: Audit and Risk Chairman: Social, Ethics and Committee Sustainability Committee 40 Risks and opportunities, assurance and controls Reporting boundary and frameworks We aim to address mainly material matters, both This integrated report reviews our financial, positive and negative, in this integrated report. Based operational, environmental, social and governance on feedback received on the 2017 report, we have performance for the year from 1 April 2017 to strived to improve on the disclosure of governance- related information and outcomes, as well as the 31 March 2018, and follows our 2017 integrated report.

6 Material events up to the date of approval have been conciseness of the report by a greater focus on Strategy material matters. However, there were a number of included. The integrated report should be read in conjunction with our full set of group annual financial significant issues which had to be addressed, which may review due by statements for a comprehensive overview of our have negatively impacted conciseness. September 2018. financial performance. The content is guided by legal and regulatory requirements, such as the Companies Act, 2008 and Our group annual financial statements are available at the King IV Report on Corporate Governance for South Africa, 2016 (King IV TM), as well as global best Clear mandate practice. The report examines our performance in relation to our strategy and the six capitals. Unless otherwise Assurance approach and support from indicated, the information presented is comparable to Our combined assurance model relies on three lines new Minister that of prior years, with no significant restatements.

7 Of defence, namely review by management, as well as The information in this report refers to the internal and external assurance. The Audit and Risk performance of the group, which includes the business Committee and the Board rely on combined assurance in assessing the adequacy of our risk management and of Eskom Holdings SOC Ltd, operating in South Africa, and its major operating subsidiaries, unless otherwise internal controls. Permanent Group stated. The results of the internal and external assurance of our suite of Chief Executive Our value creation process is depicted in our business model on pages 12 to 13. reports is set out on page 46. appointed in Our Assurance and Forensic Department provided reasonable assurance on certain aspects of the report. June 2018. Basis of preparation The sustainability KPIs contained in the shareholder Our integrated report is based on the principles compact were subject to external assurance; all but contained in the International <IR> Framework, two have received reasonable assurance.

8 Published by the International Integrated Reporting Council (IIRC). The report seeks to provide a balanced Significant The independent sustainability assurance report is included on and transparent account of how we create value through our use of and impact on the various capitals. pages 130 to 133 progress on It considers both qualitative and quantitative matters, material to our operations and strategic objectives, The consolidated annual financial statements have cost containment been audited by the group's independent auditors, which may influence stakeholders' decision-making. Our SizweNtsalubaGobodo Inc. who issued a qualified initiatives strategic risks are considered as part of this process. opinion relating to the completeness of amounts disclosed in terms of the PFMA. Except for this The determination of material matters is set out on pages 37 to 39, qualification, the consolidated annual financial while our strategic risks are discussed on pages 41 to 42 statements are fairly presented in terms of IFRS.

9 Although this is our primary report to stakeholders, Refer to the annual financial statements for the independent audit aimed at providers of financial capital, it provides opinion information of interest to all stakeholders. 2 Integrated report | 31 March 2018 Eskom Holdings SOC Ltd 3. CHAIRMAN'S STATEMENT. Our business and strategy JABU MABUZA. Chairman No-one can deny that Eskom has experienced However, a number of factors posed a serious threat Governance I believe that the action taken within a relatively short a tumultuous year. This was not due to to Eskom's ability to obtain funding for its capital It was against this backdrop that the new Board was space of time against those who played a key role in operational issues our generation plant and expansion programme, thereby putting a significant appointed in January 2018, with a clear mandate to some of the critical governance lapses over the past network produced solid performance, and strain on liquidity.

10 Firstly, the prior year's audit report stabilise and restore Eskom. Four of the directors few years demonstrates how serious we are about the new build programme delivered another contained a qualification relating to the completeness appointed to the interim Board in 2017 were retained. rooting out corruption and irregular practices. I view three units at Medupi and Kusile, with another of irregular expenditure information disclosed in the An Interim Group Chief Executive was appointed at this as only the first step in combating corruption, annual financial statements, as the auditors could not the same time, to bring stability to an organisation but it is by no means the end of the road we will two units expected in the near future, while place reliance on certain of the processes supporting which had witnessed a seemingly endless parade of continue to pursue those engaged in wrongdoing and electrification of households continued at a the information in question.