for the six months ended 30 September 2017 - …

1 Annual financial Reviewed statements condensed group 31 March 2017. interim financial statements for the six months ended 30 September 2017. Enabling Driving economic growth Reviewed condensed group interim financial statements B. Contents Currency of financial statements 1. Approval of the condensed group interim financial statements 2. Independent auditors' review report on the condensed group interim financial statements to the Minister of Public Enterprises 3. Condensed group statement of financial position 4. Condensed group income statement 5. Condensed group statement of comprehensive income 5. Condensed group statement of changes in equity 6. Condensed group statement of cash flows 7. Selected notes to the condensed group interim financial statements: Note 1 Structure and activities 8.

2 2 Basis of preparation 8. 3 Significant accounting policies 9. 4 Critical accounting estimates and judgements 9. 5 Segment information 9. 6 Issuances, repurchases and repayments of debt securities and borrowings and share capital 10. 7 Dividend paid 10. 8 Significant events and transactions 10. 9 Seasonality of interim results 10. 10 Revenue 11. 11 Primary energy 11. 12 Employee benefit expense 11. 13 Finance cost 11. 14 Income tax 11. 15 Accounting classification and fair value 12. 16 Material events subsequent to 30 September 2017 19. 17 Restatement of comparatives 20. 18 General 20. 19 New standards and interpretations 21. The reviewed condensed group interim financial statements for the six months ended 30 September 2017 have been prepared under the supervision of the acting group chief financial officer, C Cassim CA(SA).

3 These condensed group interim financial statements have been independently reviewed by the group's external auditors and were published on 30 January 2018. Currency of financial statements The reviewed condensed group interim financial statements are expressed in South African rand (R). The following are approximate values of the rand to one unit of the selected currencies: Average Reporting date mid-spot rate 30 September 31 March 30 September 30 September 31 March 30 September 2017 2017 2016 2017 2017 2016. Euro United States dollar (USD) Pound sterling (United Kingdom) Swiss franc Japanese yen Reviewed condensed group interim financial statements 1. Approval of the condensed group interim financial statements Basis of preparation The condensed group interim financial statements from pages 4 to 22 for the six months ended 30 September 2017 have been prepared in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of International Accounting Standards (IAS) 34 Interim Financial Reporting, and in the manner required by the Companies Act.

4 Going concern Eskom's liquidity for the period under review was adversely impacted by the below inflation tariff increase of for the 2018 financial year. The audit qualification on the completeness of irregular expenditure reported at 31 March 2017 in terms of the Public Finance Management Act (PFMA) as well as the governance-related challenges experienced by the organisation had a negative impact on Eskom's access to funding facilities. The board made an assessment of the ability of the group to continue as a going concern in the foreseeable future. The following aspects were considered in the assessment: The board reviewed the performance of the group for the period ended 30 September 2017. The board noted the cash flow forecast for the 15 months ending 31 December 2018 based on certain assumptions predating the appointment of the current board.

5 The board will continue to review these cash flows as well as the underlying assumptions and principles in detail in preparation for year end The tariff increase of for the 2019 financial year will have a negative impact on the liquidity of the group Eskom is pursuing finalisation of the outstanding regulatory clearing account submissions The board will continue to review the group's cost structures and capital programme to improve cash flows Eskom is placing renewed focus on the recovery of its trade receivables Eskom will not at this stage embark on any further capital expansion activities after the Kusile power station project Eskom is continuously engaging the shareholder, the department of Public Enterprises, and National Treasury to ensure that the challenges that Eskom is being faced with are addressed satisfactorily within a reasonable timeframe Government has indicated that Eskom is an important component of the economy and continues to support Eskom as a going concern The governance related challenges that Eskom has been faced with recently are being addressed mainly through the appointment of a new board and acting group chief executive on 20 January 2018.

6 These appointments will boost investor confidence and significantly improve access to the markets to raise the required funding The appointment of a permanent group chief executive and group chief financial officer as well as the finalisation of investigations into suspended executives are key priorities for the board The Ministers of Public Enterprises, Energy and Finance will work together under the leadership of the Deputy President of South Africa, to deal with other structural issues at Eskom, which include the funding model and other industry challenges identified by the inter- ministerial committee on state-owned enterprises reform The board, with the support of National Treasury, is pursuing funding options to implement the group's borrowing programme The current economic climate and the sovereign's credit ratings have been taken into account in assessing Eskom's ability to raise funds Eskom implemented a turn-around programme and is in the process of satisfactorily addressing the shortcomings identified to ensure completeness of reported irregular expenditure in terms of the PFMA that resulted in the qualified audit opinion at 31 March 2017.

7 Based on the above, the board is satisfied that the group has access to adequate resources and facilities to be able to continue its operations for the foreseeable future. Accordingly the board has continued to adopt the going-concern basis in preparing the financial statements. Approval The board is of the opinion, based on the information available to date, that the condensed group interim financial statements fairly present the financial position of the group at 30 September 2017 and the results of the operations and cash flow information for the six months then ended . The condensed group interim financial statements have been approved by the board and signed on its behalf by: J Mabuza P Hadebe C Cassim Chairman Acting group chief executive Acting group chief financial officer 26 January 2018 26 January 2018 26 January 2018.

8 2 Eskom Holdings SOC Ltd Independent auditors' review report on the condensed group interim financial statements to the Minister of Public Enterprises Introduction We have reviewed the accompanying condensed group interim financial statements of Eskom Holdings SOC Ltd set out on pages 4 to 22, which comprise the condensed group statement of financial position at 30 September 2017, and the condensed group income statement, statements of comprehensive income, changes in equity and cash flows for the six months then ended and selected explanatory notes. The board's responsibility for the financial statements The board is responsible for the preparation and presentation of these condensed group interim financial statements in accordance with the recognition and measurement requirements of IFRS, the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the requirements of the Companies Act and for such internal control as the directors determine is necessary to enable the preparation of interim financial statements that are free from material misstatement, whether due to fraud or error.

9 Auditors' responsibility for the financial statements Our responsibility is to express a conclusion on these condensed group interim financial statements based on our review. Scope of review We conducted our review in accordance with the International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of the condensed group interim financial statements consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters which might be identified in an audit.

10 Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed group interim financial statements of Eskom for the six months ended 30 September 2017, are not prepared, in all material respects, in accordance with the recognition and measurement requirements of IFRS, the presentation and disclosure requirements of IAS 34 Interim Financial Reporting and the requirements of the Companies Act. Emphasis of matter We draw attention to note 2 of the condensed group interim financial statements, which describes Eskom's liquidity position for the period under review. The audit qualification on the completeness of irregular expenditure reported at 31 March 2017 in terms of the Public Finance Management Act (PFMA) as well as the governance-related challenges experienced by the organisation had a negative impact on Eskom's access to funding facilities.