Contents

1 Contents Key drivers 1. Profile 3. Key statistics 5. Five-year financial review 7. Value creation and distribution 9. Eskom Holdings Limited Board 11. Executive Management Committee 15. Corporate governance 17. Chairman's statement 34. Chief Executive's report 50. Consolidated financial statements 57. Tables 185. Awards 191. African grid map 193. Top utilities 194. Health, safety and environmental policies 195. GRI Index 196. Acronyms 199. Key drivers New Partnership for Africa's Development (NEPAD). Through its programmes in South Africa and on the continent, Eskom actively supports NEPAD's call for action in empowerment processes such as education, training, economic and social development. Partnerships We are committed to illuminating the continent, not only by bringing light, but by sharing whatever expertise we may have at our disposal, and to succeed in this we have formed strategic partnerships with many utilities and countries throughout the African continent.

2 Strategic Intent Eskom Values: Integrity, Excellence, Customer Satisfaction and Innovation. The values define our identity as an organisation as well as the operating qualities used to improve performance. Ultimately our values will define how we will achieve our strategic intent to be the pre- eminent African energy and related services business, of global stature. Mission Eskom will grow shareholder value by exceeding the needs of local and foreign customers with energy-related services. Key Competency The ability to develop and manage the entire extended electricity value chain so as to deliver high quality, low cost electricity using low grade and scarce resources ( coal, water) in a challenging business, social, natural and political environment.

3 Core Strategy Focusing on our core business of electricity to maximise shareholder value in economic, social and environmental returns. Keeping the lights burning through optimal utilisation and operation of our asset, resource and skills base. Ensuring the sustainability of the business through balanced financial, social and environmental decision making. Managing our assets and future capital investments to ensure adequate electricity supply to meet the needs of the South African electricity market. Making focused and viable investments elsewhere in Africa to further the aims of 1 NEPAD while creating the foundation for a continental business in the long term. 2. Profile This Annual report , which covers the 15-month period from 1 January 2004 to 31 March 2005, is an integrated sustainability report based on a balance of economic, environmental, social and technical performance.

4 At the request of its shareholder, Eskom changed its financial year end from December to March. This has resulted in the current financial reporting period increasing to 15 months. Comparative information reflects the 12-month period from 1 January 2003 to 31 December 2003 making comparability of periods difficult. Where possible and practical, the performance information for the 12-month period ended 31 December 2004 has been included to enable meaningful comparisons with the previous year. Ownership The ownership of Eskom vests in the South African Government. Major products and services Eskom is a vertically integrated operation that generates, transmits and distributes electricity. Eskom generates approximately 95% of the electricity used in South Africa.

5 Eskom is regulated in terms of licences granted by the National Electricity Regulator (NER) in terms of the Electricity Act, 41 of 1987 and the National Nuclear Regulator in terms of the National Nuclear Regulatory Act, 47 of 1999. Through its subsidiary Eskom Enterprises (Pty) Limited, Eskom also undertakes other non-regulated activities related to the energy and electricity supply industry, including the provision of electricity supply and related services to African countries connected to the South African grid and the rest of Africa. In terms of Eskom's revised business model, Eskom's core markets are in order of priority, South Africa, the South African Development Community and then the rest of Africa. Countries in which operations are located The operations of Eskom are located in South Africa.

6 Eskom Enterprises has operations on the African continent, with its head office located in Johannesburg, South Africa, and other offices in Uganda, Nigeria, Mali and Zambia. Nature of markets and customers served Electricity is distributed to industrial, mining, commercial, agricultural, redistributors and residential customers locally and to international customers in southern Africa. Scale of activities Eskom, South Africa's electricity utility, is among the top eleven utilities in the world in terms of generation capacity, and among the top seven in terms of sales. Regional breakdown of sales The majority of the sales are in South Africa, with only a small percentage of sales being elsewhere in the southern African region. Corporate social investment Eskom's corporate social investment is mainly carried out through the Eskom Development Foundation, a section 21 company.

7 The goal of Eskom's corporate 3 social investment is to improve the quality of life of previously disadvantaged South Africans. It includes various programmes for skills development, job creation, Profile education and health, with an emphasis on women, youth and people with disabilities. The Development Foundation operates extensively throughout South Africa in areas that are underdeveloped, especially in rural and new urban settlements. Additional information on economic, environmental and social aspects Eskom is committed to aligning itself with international sustainability reporting initiatives. This Annual report with additional sustainability information, where appropriate, is available on the Eskom website. Contact details Telephone Website and email Eskom Head Office: +27 11 800 8111.

8 Eskom Corporate Communication: +27 11 800 2323 Eskom Environmental: Eskom Development Foundation: +27 11 800 2758 Eskom Annual report : Eskom environmental helpline: +27 11 800 4727 Eskom Development Foundation: Ethics office advisory service: +27 11 800 2791 Eskom business online: Confidential, toll-free crime line: 0800 11 27 22. Physical address: Postal address: Eskom Eskom Megawatt Park PO Box 1091. Maxwell Drive Johannesburg Sunninghill 2000. Sandton Organisational structure 4. Key statistics Group Eskom 20051 2003 2002 20051 2003 2002. Financial/business performance indicators Total assets, Rm 109 205 96 992 82 482 104 994 93 891 80 186. Reserves, Rm 44 867 40 683 37 717 42 556 39 203 36 412. Net financial market (assets)/liabilities, Rm (1 176) 3 634 9 150 1 781 5 507 10 871.

9 Revenue, Rm 42 984 32 948 29 684 41 387 31 780 28 158. Net profit for the year after tax, Rm 5 197 3 417 3 707 4 353 3 226 3 185. Cash flows from operating activities, Rm 14 295 12 664 11 808 12 837 12 256 11 633. Average selling price of electricity, cents per kWh2 16,04 16,05 14,98. Average total cost of electricity sold, cents per kWh3 13,65 13,61 12,48. Return on total assets, %4 12,73 10,35 13,07 11,67 10,58 11,92. Debt-equity ratio4 - 0,09 0,24 0,04 0,14 0,30. Debt-equity ratio (including long-term provisions)4 0,18 0,30 0,46 0,26 0,35 0,52. Productivity improvement for the period, % 1,80 2,50 1,60. Staff employed, number 31 475 31 972 32 357 29 845 28 938 29 359. Technical/business performance indicators Total electricity sold, GWh 256 959 196 980 187 957.

10 Coal burned in power stations, Mt 136,40 104,37 96,46. Energy availability factor, % 89,50 87,50 89,30. Peak demand on integrated system, MW 34 195 31 928 31 621. Nominal capacity, MW5 42 011 42 011 42 011. Net maximum capacity, MW5 39 810 39 810 39 810. Power lines (all voltages), km 347 204 336 270 325 010. Electricity customers, number (thousands) 3 603 3 505 3 418. Environmental/social performance indicators Specific water consumption by power stations, l /kWh sent out6 1,287 1,29 1,27. Relative particulate emissions, kg/MWh sent out 0,267 0,28 0,29. Carbon dioxide emissions, Mt8 247,0 190,1 175,2. Radiation release, milliSieverts (mSv) 0,00797 0,0123 0,0060. Disabling injury incidence rate, index 0,32 0,37 0,45. Work-related fatalities, number 15 5 11.