Integrated report - Eskom

1 Contents IFC About this report Performance at a glance 2 4 Our business and strategy 5 Chairman's statement 7 Our business model 17 Stakeholder engagement and material matters 21 Our strategy 24 Integrating risk and resilience Integrated report 28 Our group structure 31 March 2016 Our leadership 30 Board profiles 32 Exco profiles 34 Operating performance 35 Chief Executive's review 39 Revenue and customer sustainability 44 Operational sustainability 55 Sustainable asset creation 63 Environmental and climate change sustainability 70 Safety and security 73 Building a sustainable skills base 76 Transformation and social sustainability 81 Financial review 82 Chief Financial Officer's report 84 Value added statement 85 Condensed annual financial statements 89 Key accounting policies.

2 Significant judgements and estimates 91 Financial sustainability 99 Our governance 100 Governance Framework 101 King III application 102 Board of Directors and committees 103 Executive Management Committee 104 Remuneration and benefits 106 Ethics in Eskom 107 Assurance and controls 108 IT governance 109 Supplementary information 109 Fact sheets available online 110 Abbreviations 111 Glossary of terms 113 Independent sustainability assurance report 116 GRI G4 indicator table 120 Statistical tables 126 Customer information 128 Plant information 131 Benchmarking information 136 Environmental implications of using or saving electricity 137 Leadership activities 148 Contact details Eskom Holdings SOC Ltd III.

3 Navigation icons About this report The following navigation icons are used throughout this report to link material matters, risks, key performance indicators and performance to Unless otherwise stated, the information in this Assurance approach sustainability dimensions and strategy: report refers to the performance of the group, Board responsibility and approval Our combined assurance model distinguishes three which includes the business of Eskom Holdings lines of defence, namely review by management, The Board is accountable for the integrity and completeness of the Integrated report and any supplementary SOC Ltd, operating in South Africa, and its major Financial sustainability together with internal and external assurance, information, assisted by the Audit and Risk Committee and the Social, Ethics and Sustainability Committee.

4 Operating subsidiaries. in order to optimise governance oversight, risk The Board has applied its collective mind to the preparation and presentation of the Integrated report and management and control. The Audit and Risk has concluded that it is presented in accordance with the International <IR> Framework. Our group structure and information on our subsidiaries are Revenue and customer provided on pages 28 Committee and Board rely on combined assurance sustainability The Board, considering the completeness of the material items dealt with and the reliability of information in forming their view of the adequacy of our risk presented, based on the combined assurance process followed, approved the 2016 Integrated report , management and internal controls.

5 Annual financial statements and supplementary information on 31 May 2016: Although the report as a whole has not been Operational sustainability Forward-looking statements externally assured, those sustainability KPIs Certain statements in this report regarding contained in the shareholder compact and reported Eskom 's business operations may constitute on in this report were subject to external assurance, forward-looking statements. These include and have received reasonable assurance. The entire Sustainable asset creation Dr Baldwin Ngubane Ms Chwayita Mabude Ms Chwayita Mabude all statements other than statements of report has been internally assured by our Assurance Chairman Acting Chairman: Audit and Risk Chairman: Social, Ethics and historical fact, including those regarding and Forensic Department.

6 Committee Sustainability Committee the financial position, business strategy, Environmental and climate management plans and objectives for future The independent sustainability assurance report can be found on change sustainability operations. Forward-looking statements pages 113 to 115. constitute our current expectations based on reasonable assumptions, data or Furthermore, the consolidated annual financial Safety and security This Integrated report is based on the principles The content is further guided by legal and regulatory methods that may be incorrect or imprecise statements have been audited by the group's contained in the International Integrated Reporting requirements, such as the Companies Act, 2008 and and that may be incapable of being realised, independent auditors, SizweNtsalubaGobodo Inc.

7 Framework (the International <IR> Framework) the King Code on Corporate Governance in South and as such, are not intended to be a who issued an unmodified opinion. Building a sustainable published by the International Integrated Reporting Africa (King III), as well as global best practice. This guarantee of future results. Actual results skills base Council (IIRC). <IR> focuses on value creation report also contains some GRI G4 disclosures. could differ materially from those projected Refer to pages 11 to 13 of the annual financial statements for the over the short, medium and long term, guided by in any forward-looking statements due to audit opinion the six capitals set out in the International <IR> The GRI G4 indicator table is available as a fact sheet at the back various events, risks, uncertainties and Transformation and social Framework, thereby ensuring that all resources, and of this report other factors.

8 Eskom neither intends to nor sustainability how they interact with one another, are considered. assumes any obligation to update or revise <IR> takes account of the impact of the internal Reporting boundary and frameworks any forward-looking statements, whether and external environment on the company's value This Integrated report reviews our economic, technical, as a result of new information, future events Building a solid reputation creation process; the connectivity between strategy, operational, social and environmental performance for or otherwise. governance, performance and future outlook; the the year from 1 April 2015 to 31 March 2016, with two impact of the organisation's activities on the six years' comparative information and short- and medium- capitals; and the trade-offs that influence value term future targets being presented.

9 It follows our 2015. Request for feedback creation over time. Integrated report . Material events up to the date of We welcome your feedback on the usefulness of approval have been included. Our suite of reports Basis of preparation this report and ways in which we could improve our Our Integrated report should be read in conjunction Our 2016 suite of reports comprises the following, all of which are available online: Our Integrated report seeks to provide a balanced report in future, to ensure that it continues to provide with our full set of group annual financial statements and transparent assessment of how we create value, Integrated report and fact sheets relevant information.

10 Please send any suggestions to for a comprehensive overview of our financial considering both qualitative and quantitative matters performance. The Integrated report , which provides an overview of our performance, is prepared that are material to our operations and strategic in accordance with the IIRC's International <IR> Framework, and subject to combined objectives, which may influence our stakeholders'. Our group annual financial statements are available online at assurance. Supplementary information, pertinent to interested stakeholders, is available decision-making. Matters important to stakeholders Supplementary Additional at the back of the report .