Global Power Company of the Year 2001

Proudly South African

Minerals and

Energy

Portfolio

Committee 19 March 2003

ESKOM HOLDINGS LIMITED

Global Power Company of the Year 2001

Content

Section A Who are we

Section B Long-term trends

Section C Business performance 2002

Section D Financial plan

Section E Budget 2003

ESKOMESKOMWho are we

Section A

EskomStrategic Intent

Eskom will be the pre-eminent African energy

and related services business of global stature.

Values- Integrity - Excellence

- Innovation - Customer satisfaction

Who are we

ESKOM REGULATED• Generation• Transmission• Distribution

ESKOM NON-REGULATED• Engineering• Power business

operations• Primary Energy• Telecoms and

Information Technology

Eskom

General features• Wholly State-owned

• Is the ninth largest electricity utility in the world by sales

• Separate legal entity under Companies Act (previously Electricity Act and

Eskom Act)

• Managed on business principles

• Is financed by net financial market liabilities & investments as well as

reserves

• Supplies approximately 95% of electricity in South Africa and 50% in Africa

• Electricity sales in 2002 were 187 957 GWh

• Internationally, among the lowest cost electricity providers

Industrial electricity prices U

SA c

ents

per

kW

h

0

1

2

3

4

5

6

7

8Ital

y

USA

Ger

man

y

Belgi

um

Den

mar

k

Net

her

lands

Spai

n

UK

Fran

ce

Aust

ralia

Can

ada

Finla

nd

Swed

en

South

Afric

a

Supplied by NUS Consulting Group’s

International Electricity Report April 2002

Sales (GWh)Company Country Sales (TWh)

Rating by sales

RAO-UES Russia 626,8 1EDF France 476,5 2Tepco Electric Power Co. Japan 275,5 3KEPCO South Korea 257,7 4AEP USA 245,0 5E.On Germany 225,7 6RWE Energy AG Germany 209,8 7Enel Italy 206,0 8Eskom South Africa 181,5 9

Source: Data Monitor UK, 2001

General featuresGeneration

•Operates 24 power stations with a nominal capacity of 42 011 MW

•Operates the largest dry cooling power station in the world

•Technical performance at world class standards

•Satisfied a peak demand of 31 621 MW this year

General features

Transmission

•Supports the development of a southern African transmission grid to encourage co-operation and accelerate growth in the region

•Has 26 510 km of transmission lines covering the whole country.

Transmission

Windhoek

Gaborone

Pretoria

Johannesburg

Cape Town

MaputoMbabane

South Africa Swaziland

Lesotho

Namibia

BotswanaZimbabwe

H

H

H

H

P

H

H

T

T

ET

ET

ET ETET

ETETET

ET ET

ET

T

P

N

ET

South African grid superimposed on Europe

3

Madrid

Berlin

General features

Distribution

•Has 298 500 km of distribution and reticulation lines

•Satisfies the electricity needs of 3 417 652 customers

•Has electrified 2,8 million homes since 1991

General featuresEskom Enterprises

•Is the non-regulated subsidiary

•Is the vehicle for expansion into Africa and beyond.

•Presence in Europe, Asia and a substantial presence in Africa

ESKOMESKOMLong-term trends

Section B

Electrification CUMULATIVE NUMBER OF HOMES ELECTRIFIED

0

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2,400,000

2,700,000

3,000,000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

2.8 million homes electrifi

ed

211 628

Black economic empowerment R’m • Spent R13.3bn

over a five year period

• Spent R197m with women empowered enterprises in 20020

1000

2000

3000

4000

5000

6000

1998 1999 2000 2001 2002

Other Coal

Employment equity (MANAGERIAL AND SUPERVISORY CATEGORIES)

0

10

20

30

40

50

60

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

%54.6

5.2

Gender equity (MANAGERIAL AND SUPERVISORY CATEGORIES)

0

2

4

6

8

10

12

14

16

18

20

22

24

1994 1995 1996 1997 1998 1999 2000 2001 2002

% 24.5

10.4

Real price decreaseTariff increase deflated by average consumer price index

Base = 100 in 1990

Benefit to customer in excess of R72.6

billion

ESKOMBUSINESS PERFORMANCE BUSINESS PERFORMANCE

20022002

Section CSection C

Summary of salient points2002 2001 % Change

Net income before tax (R'bn) 5.5 3.8 45.1%Net income for the year (R'bn) 3.7 2.6 46.0%Opex to revenue 60.2 60.0 -0.4%Return on assets (%) 13.1 11.0 18.7%Cash available from operations (R'bn) 11.8 8.6 37.2%Debt-Equity 0.2 0.4 44.2%Sales volumes (GWh) 187,957 181,511 3.5%

Overview

•Total productivity was positive to the extent of R382m or 1.6%

•First dividend of R549m paid

•Maintained world class technical

performance eg. UAGS better than

international best quartile

•Sustained good environmental

performance with further reductions in

emissions

Overview

•Exceeded the electrification target for the year by 6 257 connections

•Spent R 494m on ongoing skills development and training

•Eskom group procured goods and services to the value of R5.5bn from black economic empowered enterprises

Overview

The group continues to contribute to the fight against HIV/AIDS with other corporates Paid to date R 53m to the development of a vaccine Committed an additional R15m per annum for the

next five years

Focused on continued education and awareness programmes with special focus on voluntary counselling and testing

Treats HIV/AIDS as a focus area

Overview

ESKOMFINANCIAL PLAN 2003-FINANCIAL PLAN 2003-

20072007

Section DSection D

Salient ratios of financial plan

2003 2004

2005 2006

2007

Debt: equity

0.31 0.30 0.21 0.14 0.10

Historic ROA

11.1% 12.4%

13.0%

14.1%

14.2%

Inflation adjusted ROA

1.6% 2.6% 3.2% 3.9% 4.3%

Return on equity

9.2% 11.2%

11.5%

12.7%

12.6%

Income statementRand Million 2003 2004 2005 2006 2007

Revenue 30 561 34 163 37 050 40 984 44 222

Primary energy (7 122) (7 691) (8 387) (9 450) (10 213)

Operating costs (11 775) (12 370) (12 867) (13 510) (14 245)

Depreciation (3 896) (4 413) (5 009) (5 426) (6 112)

Operating income

7 767 9 689 10 787 12 598 13 652

Interest (2 134) (2 222) (2 328) (2 251) (2 229)

Profit before tax 5 633 7 467 8 460 10 347 11 423

Significant investment required into the future

2003 2004 2005 2006 2007

Generation 2 556 3 205 3 115 3 809 4 645

Transmission 1 734 3 670 796 738 688

Distribution 2 432 2 373 2 307 2 645 2 912

Other 2 725 2 943 3 118 4 435 4 342

Total 9 447 12 191

9 336 11 627

12 587

The above figures do not include construction of new power stations

Total capital from 2003 – 2007 = R46.3bn

2002 Rands R’millions

Summary of salient points2003 2004 2005

Sales growth 1.9% 3.4% 2.5%Productivity improvement 1.4% 0.7% 1.1%

Electrification connections 164,107 200,000 200,000 Employment equity > 54.6% > 2003 > 2004Gender equity 24% 26% 30%Black economic empowerment

- % of dicretionary expenditure 44% 50% >50%

Unit capability factor 90.8% 91.0% 91.0%

ESKOMBUDGET 2003BUDGET 2003

Section ESection E

ESKOMHoldings Ltd

2003 2003 BUDGETBUDGET

Summary of salient points2003 Budget

Electrification connections 164,107 Employment equity > 54.6%Gender equity 24%Black economic empowerment (R'm) 5,295

Sales growth 1.9%Producitivity improvement 1.0%Return on assets 11.2%

Net profit before tax (R'm) 5,004 Net profit after tax (R'm) 3,344

Profit before tax and fair value

5,0044,904

3,6083,213

2,062

2,4743,0833,072

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

1996 1997 1998 1999 2000 2001 2002 BUD 2003

ESKOM

Income Income Statement Statement

Budget Budget 20032003

ENTERPRISES

Summary - 20032003 Budget

Employment equity > 50.0%Gender equity 17.0%Black economic empowerment (R'm) 275

Sales growth 15.0%Producitivity improvement 2.3%Return on equity 14.0%

Net profit before tax (R'm) 154 Net profit after tax (R'm) 96

•The budget indicates that the year ahead will be more difficult than the one that has passed

•Consolidation of the businesses will be taking place

Concluding remarks

ESKOM Thank you.