2026 ANNUAL FINANCIAL STATEMENTS ii Contents Directors’ report 2 23 Assets and liabilities held-for-sale 93 Performance against shareholder compact 4 24 Share capital 93 Report of the audit committee 8 25 Debt securities and borrowings 94 Statement by company secretary 11 26 Payments received in advance and contract liabilities and 96 deferred income Independent auditor’s report to Parliament on Eskom Holdings 12 SOC Ltd and its subsidiaries 27 Employee benefit obligations 98 Statements of financial position 26 28 Provisions 101 Income statements 27 29 Lease liabilities 103 Statements of comprehensive income/(loss) 27 30 Trade and other payables 103 Statements of changes in equity 28 31 Loan from shareholder 103 Statements of cash flows 29 32 Revenue 104 Notes to the financial statements: 30 33 Other income 104 1 General information 30 34 Primary energy 104 2 Summary of material accounting policies 30 35 Employee benefit expense 105 3 Capital management, going concern and impairment 41 36 Net impairment and write down of assets 105 4 Key sources of estimation uncertainty, critical accounting 47 37 Other expenses 105 estimates and assumptions 38 Depreciation and amortisation expense 105 5 Financial risk management 52 39 Net fair value, foreign exchange gain/(loss) and deferred 106 6 Accounting classification and fair value 70 income amortisation 7 Segment information 75 40 Finance income 106 8 Property, plant and equipment 78 41 Finance cost 106 9 Intangible assets 81 42 Income tax 107 10 Future fuel supplies 81 43 Cash generated from operations 108 11 Investment in equity-accounted investees 81 44 Net debt reconciliation 109 12 Investment in subsidiaries 82 45 Financial guarantees, contingent liabilities and assets 109 13 Inventories 82 46 Commitments 110 14 Deferred tax 83 47 Related-party transactions and balances 111 15 Loans receivable 84 48 Events after the reporting date 113 16 Embedded derivatives 84 49 Restatement of comparatives 114 17 Derivatives held for risk management 85 50 Remuneration of directors and executives 114 18 Finance lease receivables 90 51 New standards and interpretations 118 19 Payments made in advance 90 52 Information required by the Public Finance Management Act 120 20 Trade and other receivables 91 53 Reportable irregularities and matters under investigation 124 21 Investments 92 Appendix – Abbreviations, acronyms and definitions 127 22 Cash and cash equivalents 92 Contact details 130 The annual financial statements were prepared under the supervision of the chief financial officer, Mr C Cassim CA(SA). The financial statements have been audited in compliance with section 30 of the Companies Act of South Africa, 71 of 2008 (Companies Act), and approved by the board of directors on 30 August 2026. The audited financial statements of the group and company as at and for the year ended 31 March 2026 are available for inspection at the company’s registered office and were published on 31 August 2026. The full suite of the group’s externally published reports, including the financial statements and integrated report, are available at www.eskom.co.za. 1 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Directors’ report for the year ended 31 March 2026 The directors are pleased to present their report for the year ended 31 March 2026. The information in this report covers the group performance of Eskom and its major operating subsidiaries, unless otherwise stated. It provides a high-level summary of the pertinent issues that characterised the year under review, including material developments after year end. Further detail is contained in the primary financial statements with notes, the integrated report (including the accompanying suite of reports) and the sustainability report. 1. Nature of the business Eskom Holdings SOC Ltd (Eskom) and its subsidiaries (together the group) is South Africa’s primary electricity supplier through the vertically integrated regulated electricity business (Eskom and National Transmission Company South Africa SOC Ltd (NTCSA)) that generates, transmits and distributes electricity to local industrial, mining, commercial, agricultural, redistributor (metropolitan and other municipalities) and residential customers and to international customers in southern Africa. The group also purchases electricity from independent power producers (IPPs) and international suppliers in southern Africa. Eskom is a state-owned company, with the Minister of Electricity and Energy as the shareholder representative. The state is the only shareholder in Eskom. The group’s head office is in Johannesburg. The nature of the business of the significant operating subsidiaries is set out in note 12 in the annual financial statements. The primary business focus of the other subsidiaries is to support the electricity business. 2. Operational and financial performance Operationally, network and generation plant performance showed significant improvements due to targeted maintenance initiatives and improved planning. Improvements in system stability and operational performance further contributed to improved financial performance. A high-level summary of the performance includes: • Energy availability factor (EAF) improved to 65.16% (2025: 60.60%), although it did not meet the shareholder’s target of 70%. • Total system minutes lost for events <1 minute decreased to 3.10 minutes (2025: 4.37 minutes) with two (2025: four) major interruption incidents recorded during the year. • Stable network performance at distribution with system average interruption duration index of 35.09 (2025: 34.91). Performance against the shareholder compact was positive overall, with Eskom achieving 71% (2025: 62%) of the shareholder compact key performance indicators (KPIs) for the year. This signals a significant improvement from the prior year. Underperformance was noted in a few areas such as emissions performance and the delivery of new transmission line infrastructure. Corrective action and recovery initiatives continue to be a key focus area. Further information is disclosed in the performance against shareholder compact section on page 4. The group achieved earnings before interest, tax, depreciation and amortisation (EBITDA) of R108.6 billion (2025: R98.0 billion restated) mainly because of increased revenue due to the 12.74% tariff increase granted by the National Energy Regulator of South Africa (NERSA) and savings on primary energy costs resulting from improved operational performance. Profit before tax and net profit after tax also improved to R39.4 billion (2025: R21.9 billion restated) and R30.3 billion (2025: R14.0 billion restated) respectively, mainly attributable to lower net finance costs as well as lower net fair value and foreign exchange gains/losses related to financial instruments. Refer to the performance overview and financial overview sections in the integrated report for more information. 3. Going concern The group’s liquidity position improved significantly compared to the prior year mainly due to support received through the debt relief arrangement with government with a decline in debt servicing obligations, improved operating cash flows and tariff increases granted by NERSA. Despite the improvement, the events, conditions and assumptions described in note 3.2 include inherent material uncertainties that may cast significant doubt on the ability of the group and company to continue as a going concern. The Eskom Board (Board) has a reasonable expectation that these risks will be satisfactorily addressed with the initiatives and mitigation strategies discussed in note 3.2 and that the group and company have access to adequate resources and facilities to be able to continue its operations and fund the capital programme for the foreseeable future as a going concern. The consolidated and separate financial statements have therefore been prepared on a going-concern basis. 4. Strategic, regulatory and financial reporting matters 4.1 Unbundling progress The President established the Eskom Restructuring Task Team (ERTT) to oversee the restructuring process to reform the electricity sector. The ERTT prepared a Phase 1 report focussing on high-level recommendations for establishing an independent transmission system operator including the proposed transfer of transmission assets. The President’s endorsement of the report was announced on 31 July 2026. The report emphasised that implementation should occur in a manner that addresses lender requirements, avoids defaults, protects shareholder rights and interests and ensures that Eskom is not placed in a worse financial position as the transition progresses. The ERTT identified proposed interim measures to strengthen the independence of NTCSA and ring-fence the different licensed activities of NTCSA. These measures include ensuring that there are no common directors on the Eskom and NTCSA boards, appointment by the NTCSA board of the NTCSA chief executive officer and senior management, financial and operational autonomy, unwinding of the upstream guarantee issued by NTCSA to lenders, information barriers for commercially sensitive information and arms-length intercompany and legal arrangements. Steps will also be taken towards unbundling tariffs, clarifying payment allocations in the restructured market and developing measures to protect participants from non- payment. The proposed transfer of assets will require careful consideration of potential accounting (control in terms of consolidation) and tax implications (degrouping within six years after the assets were transferred from Eskom to NTCSA may trigger deemed disposal and capital gains tax) as well as lenders protection under section 7 of the Eskom Conversion Act, 13 of 2001, including the extent to which funding support and other rights will apply to the proposed industry structure which may influence lenders’ willingness to continue to provide funding to the Eskom group. These considerations are important to support a stable and orderly transition as the reform process progresses. It is important that the implementation process appropriately addresses lender requirements, financing arrangements and contractual obligations. Addressing municipal arrear debt and the development of an appropriate legislative and regulatory framework are key aspects in developing a sustainable implementation pathway for a fully independent transmission system operator. The Board supports the establishment of an independent transmission system operator that will own the transmission assets at the appropriate point in the future. The Board has a fiduciary responsibility to ensure that Eskom remains financially sustainable and supports a pragmatic approach of implementing electricity sector reforms as a carefully sequenced process with clear milestones. The focus remains on maintaining operational sustainability, ensuring that the gains in energy security achieved to date are not reversed and protecting the critical capacity required to support economic growth. 2 Phase II of the process will focus on developing a detailed transactional structure and implementation plan with timeframes and addressing municipal arrear debt, lender requirements, financing arrangements and contractual obligations. The terms of reference requires developing solutions that support the long-term financial sustainability of both Eskom and the independent transmission system operator. Eskom continues to engage with affected stakeholders as the reform programme progresses. 4.2 Municipal arrear debt Total gross municipal arrear debt escalated significantly by R17.0 billion (17.9%) to R111.6 billion (2025: R94.6 billion) at year end and continues to increase negatively affecting the financial sustainability of the group. The municipal debt management strategy is being intensified through payment arrangements, distribution agency agreements, credit control action and implementation of the Promotion of Administrative Justice Act, 3 of 2000 (PAJA) process to terminate or limit supply to defaulting municipalities. Refer to note 5.1.1. 4.3 Electricity sales Sales volumes decreased to 178.0TWh (2025: 189.7TWh) during the year mainly due to smelter curtailments, unplanned shutdowns and shaft closures in the mining sector, solar installations across many sectors and weaker-than-expected demand recovery. The ferroalloy and iron and steel segments, in particular, are experiencing sustained pressure from global commodity markets, rising input costs and structural competitive challenges. Eskom is implementing a range of initiatives to address the decline in sales and support the growth of electricity demand. One of the initiatives includes an amended negotiated pricing agreement framework, including an interim concessionary pricing framework of 62c/kWh approved by NERSA for the Samancor Chrome and Glencore-Merafe Chrome ferrochrome smelters on 29 May 2026 effective from 1 June 2026 for five and three years respectively. The arrangement will not increase tariffs for Eskom’s broader customer base, require additional borrowings or require further government support. In addition, Eskom is expanding revenue streams through initiatives such as wheeling while preparing for potential growth in electricity demand from the data centre sector. 4.4 NERSA tariff and Regulatory Clearing Account decisions NERSA approved an average standard tariff increase of 12.74% for 2026 under the multi-year price determination (MYPD) 6 and additional allowable revenue of R54.7 billion, following a court review application by Eskom. The additional revenue will be recovered with R12 billion in 2027, R23 billion in 2028 and R19.7 billion beyond the MYPD 6 period resulting in tariff increases of 8.76% and 8.83% for 2027 and 2028 respectively. NERSA also concluded on Regulatory Clearing Account (RCA) cases relating to 2015 to 2021 on 5 May 2025 resulting in a settlement of R40.2 billion which was endorsed through a court order on 9 May 2025. Progress on open RCA applications relating to prior years continues to be monitored. 5. Board and executive committee members 5.1 Changes to the Board The term of the Eskom Board appointed in October 2022 concluded on 30 November 2025 following an extension by the shareholder from 30 September 2025. Members whose term ended include Ms FBB Abdul Gany, Ms APZ Mafuleka, Mr B Ntshalintshali, Ms T Ramano, Mr L Mkhabela and Dr C Von Eck. Mr LL Goqwana, Mr CR le Roux, Dr TL Mthombeni and Dr CB Vilakazi were re-appointed for a further three years on 1 December 2025. Mr D Marokane and Mr C Cassim continued as executive directors. The new members appointed effective from 1 December 2025 are Dr AJ Barendse, Dr EK Chiloane, Ms SN Govind, Dr DC Matshoga, Mr TP Nchocho, Prof JV Peach and Ms BS Tshabalala. Ms TP Zondi-Mthembu was subsequently appointed effective from 5 December 2025. 5.2 Changes to Exco Mr ML Bala served as group executive: distribution and a member of the executive committee (Exco) until 31 July 2025. Ms A Mlambo was appointed as acting group executive: distribution from 1 August 2025 until 31 May 2026. Mr J Munshi was appointed as group executive: distribution effective from 1 June 2026. Mr SJ Mthembu was appointed as group executive: legal, compliance and regulation effective from 1 June 2026. 6. Governance and assurance 6.1 Debt officer The funding and liquidity activities of the group are managed by a centralised treasury function overseen by the group treasurer and Eskom’s debt officer, Mr K Masike, who was appointed general manager on 1 December 2025 after acting in the position from August 2024. 6.2 External auditors Deloitte & Touche was appointed as external auditors from 2022 with Mr AJ Dennis as the lead engagement partner for the 2022 to 2026 financial years. 6.3 Reportable irregularities The action plans to address reportable irregularities raised in previous years remained a focus area. Four reportable irregularities reported from 2022 to 2025 were closed because of improvements in the related control environments including: – Failure to fulfil certain duties relating to investigations. – Disciplinary procedures and consequence management not done timeously. – Incomplete or inaccurate financial records as required by the Public Finance Management Act, 1 of 1999 (PFMA) and Companies Act. – Submission of incomplete and inaccurate draft financial statements for audit. It is acknowledged that some reportable irregularities will reoccur and remain open until all related aspects are concluded as it takes time to resolve these matters because of the inherent nature thereof, such as environmental regulatory compliance. Detailed progress on reportable irregularities can be found in note 53. 7. Events after the reporting date Events after the reporting date are discussed in note 48. 8. Approval The group annual financial statements for the year ended 31 March 2026 were prepared under the supervision of the group chief financial officer, Mr C Cassim CA(SA), and approved by the Board on its behalf by: M Nyati DL Marokane C Cassim Chairman Group chief executive Group chief financial officer 30 August 2026 30 August 2026 30 August 2026 3 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Performance against shareholder compact The shareholder compact is agreed annually between the Board and the Department of Electricity and Energy. It includes key performance targets aligned to the shareholder's strategic intent statement and Eskom's corporate plan, for which performance is monitored during the year. Performance against the shareholder compact was subject to audit by the external auditors with the related audit opinion detailed on page 20. Performance results The table below sets out the group’s performance measured against the shareholder compact. All the KPIs in the compact refer to the Eskom group, except where specifically indicated. Actual performance against the year end target is indicated as follows: Actual performance for the year met or exceeded the target Actual performance for the year did not meet the target Key performance indicator Ref Unit Target Actual Actual 2026 2026 2025 Achieve universal access, availability, affordability and quality Lost-time injury rate (employee) rate 0.30 0.18 0.23 Energy availability factor (EAF) (a) % 70.00 65.16 60.60 Relative particulate emissions (b) kg/MWh sent out 0.35 0.98 0.64 Specific water consumption ℓ/kWh sent out 1.37 1.34 1.40 Total system minutes lost for events <1 minute minutes 3.53 3.10 4.37 System average interruption duration index (SAIDI)1 hours 37.50 35.09 34.91 System average interruption frequency index (SAIFI)1,2 events 14.50 11.72 11.68 Total electrification connections2 number 41 340 67 578 83 031 Off-grid electrification connections2 number 1 225 2 119 n/a Distribution total energy losses % 11.33 10.54 10.42 Payment levels (excluding municipalities and metros)1,2 % 99.55 100.19 99.75 Capital payment levels (municipalities)1,2 % 87.20 89.74 88.88 Customer delight1,2 index 3.60 3.77 n/a EBITDA3 R million 90 020 108 648 98 012 Cash interest cover ratio 2.88 3.80 2.76 Debt service cover (c) ratio 1.69 1.55 1.11 Assessment of whistle-blower reports completed within 30 calendar days of % 80.00 95.45 93.40 being registered1 Investigations that commenced within 60 calendar days of the preliminary (d) % 80.00 11.61 12.24 assessment report being completed Cases where recommendations emanating from forensic investigations have (e) % 80.00 50.82 42.68 been fully implemented Attain sovereign and regional energy security Transmission lines installed (f ) km 423.0 270.8 292.6 Transmission transformer capacity installed and commissioned MVA 3 750 4 000 2 620 Progress against the Eskom legal separation process1,2,4 milestones achieved 100% 100% of n/a achievement quarterly of quarterly targets targets achieved Drive industrialisation and lead innovation Smart meters installed and commissioned2 (g) number 800 000 610 223 321 496 Local content (Eskom-wide)1,5 % 80.00 83.93 93.79 Digitalisation of the procurement process2 (h) % 60 45 20 Establishment of the Komati copper recycling plant 2 (i) % Construction 52.5 n/a 100% complete Qualitatively transform energy demographics, and elevate the role of women and youth New learner enrolment number 290 1 293 952 Preferential procurement % of total measurable 80.00 94.58 93.21 procurement spend (TMPS) B-BBEE score level5 number 4 3 3 CSI committee spend R million 146.10 153.25 146.20 Assert local, continental and global energy leadership Generation capacity recovered1,2 MW 800 868 n/a New generation capacity added (renewables)2 (j) MW 95 – n/a Research and development1,2 % 90.00 92.51 n/a International sales (excluding negotiated pricing agreements)2 GWh 1 984 5 486 6 513 1. Refer to key aspects to be considered for relevant KPI. 2. New measure included in the 2026 shareholder compact. The performance for 2025 has been included for comparative purposes and has not been audited. The prior year actual is reported as not applicable where no comparative is available. 3. The comparative figure was restated. Refer to note 49 for further information. 4. The quarterly targets are completion of the group’s operating model design in the third quarter and submission of NTCSA’s market operator licence to NERSA in the fourth quarter. 5. Measure consists of Eskom company only. 4 Key aspects to be considered for relevant KPI • SAIDI and SAIFI The reported performance for SAIDI and SAIFI are based on three-year historical averages of actuals up to 31 March 2025 and therefore does not represent to be an actual performance result. The data limitations and resultant use of averages for both KPIs were due to system constraints experienced during distribution’s transition to a new operational tracking system during August 2025. The reported result may therefore not be representative of the achievement against the approved target (based on actual values) which was not updated with the change in the measurement basis. The shareholder was made aware of the approach and, after year end, confirmed in writing their acceptance of Eskom’s reporting basis until the data limitations have been resolved. Since April 2026, reporting based on actual values resumed and consequently, the figure to be reported at 31 March 2027 will be based entirely on actual values, as indicated in the measure specification document. • Customer delight The customer delight index is a new composite customer satisfaction measure based on a weighted average of 10 sub-KPIs. The measure covers customer surveys from key customers, customer surveys from selected small power users whose customer cases were resolved after interaction with the Customer Contact Centre, the performance of customer care channels, bill accuracy of small power users and the execution of distribution planned outages. The external auditors reported a material finding in relation to the indicator. Sufficient and appropriate evidence could not be obtained to indices to the value of 2.04 due to limitations in verifying survey results from: 1. Key customers 2. Selected small power users whose customer cases were resolved after interaction with the Customer Contact Centre 3. Customer queries created via customer walk-ins at the contact centre hubs related to the First Contact Resolution, Work Items Completed within KPI and One Contact Resolution. The external auditor was unable to determine whether any adjustment would be required to the Customer Delight reported value of 3.77, resulting from the matters described above along with any other matters that may have arisen on indices not subjected to further testing due to the scope limitation identified. Management initiated targeted remedial actions, including enhancements to survey design and respondent validation, formalisation of the Customer Delight calculation methodology and improved record keeping of customer interaction at the Customer Contact Centre. • Payment levels (excluding municipalities and metros) and Capital payment levels (municipalities) Payment levels are measured as payments received against amounts billed, expressed as a percentage. Capital payment levels exclude interest. • Assessment of whistle-blower reports completed within 30 calendar days of being registered The KPI was measured on cases recorded within the case management system managed by the Group Investigations and Security department. The prior year actual was measured on assessments completed within 21 working days of being registered based on the 2025 shareholder compact. • Progress against the Eskom legal separation process Legal separation in the 2026 shareholder compact was based on 100% achievement of the quarterly targets, which included completion of the operating model design in the third quarter and submission of the NTCSA market operator licence to NERSA in the fourth quarter. Legal separation in the 2025 shareholder compact was based on corporatisation of distribution and was achieved based on the signing of the merger agreement for National Electricity Distribution Company of South Africa SOC Ltd (NEDCSA). • Local content (Eskom-wide) Local content is based on procurement of locally produced goods and services as a percentage of the total value of contracts awarded for all procurement at Eskom company level (Eskom-wide). Local content was based only on procurement from designated sectors and 100% natural content in the prior year. The prior year actual was restated based on the Eskom-wide measure. • Generation capacity recovered The KPI measures the capacity recovered from units in extended outage that were successfully resynchronised to the grid, specifically for unit 4 of Medupi power station and unit 12 of Ankerlig power station in line with the shareholder compact KPI measure specification document. Capacity is regarded as recovered once a generating unit has been successfully resynchronised to the national grid. The inclusion of these units reflects the restoration of dispatchable generation capacity and operating reserves to the power system, thereby supporting improved system reliability, operational sustainability and reduced risk of load reduction measures being implemented. The units could not be synchronised to the national grid for an extended period of more than 12 months at the start of 2026. • Research and development The research and development KPI was redefined in the 2026 shareholder compact to be a composite measure, equally weighted based on the percentage spend of allocated research and development funding as well as the delivery of flagship research projects against the baseline schedule. In the prior year the KPI measured only the percentage spend of allocated research and development funding. 5 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Performance against shareholder compact continued Reasons for targets not achieved Ref Key performance Target Actual Reason indicator and unit 2026 2026 (a) EAF, % 70.00 65.16 The shareholder target was not achieved despite the notable recovery in EAF performance during the year. Performance was negatively affected by high levels of unplanned losses (unplanned capability loss factor (UCLF)) of 22.88% for the year due to partial load losses at several power stations including Kendal, Matimba, Majuba, Duvha and Tutuka. These losses resulted from draught plant, milling, turbine, feed‑water and gas‑cleaning equipment challenges. Planned maintenance (planned capability loss factor (PCLF)) remained high at 11.56% due to concerted efforts to prioritise reliability‑focused outages under the refocused Generation Reliability and Sustainability Plan. Plant reliability and sustainability is being improved through targeted initiatives to reduce unit trips, enhance outage planning and execution, execute key strategic projects and support interventions focused on people, plant and process. (b) Relative 0.35 0.98 The year end target was not met due to very poor emissions performance in the first quarter particulate of the year, particularly at Kendal, Matimba and Kriel power stations, due to ash plant emissions, challenges, dust-handling plant malfunctions as well as underperforming sulphur trioxide plant kg/MWh sent out and electrostatic precipitators that limit particulate emissions. Emissions performance improved during the remainder of the year as a result of sustained focus on plant operation and maintenance. Improved generation performance enabled outages and maintenance to address plant challenges which previously led to high emissions. Affected units were able to be operated at lower loads or placed into cold reserve. Interventions to address ash‑ and dust‑handling challenges also contributed to improved outcomes at underperforming stations. (c) Debt service 1.69 1.55 The ratio improved compared to the prior year mainly due to increased cash from operations cover, ratio and a reduction in debt service costs (both interest and capital repayments). The reported ratio includes the impact of USD denominated funding from China Development Bank that was repaid and subsequently converted to CNY in August 2025. Excluding the impact of the conversion the reported ratio would have been 2.29. (d) Investigations that 80.00 11.61 Investigations that commenced within 60 calendar days of the preliminary assessment report commenced being completed are measured on cases where preliminary assessments recommend a full within 60 forensic investigation. calendar days of the preliminary Performance was negatively affected by the backlog of forensic cases dating back to 2020. assessment Investigations had not yet commenced on most cases referred for a full forensic investigation report being during the year. The focus remains on clearing the backlog by addressing forensic capacity completed, % constraints, including appointing external service providers and establishing a new forensic panel. High‑priority cases will be expedited through Eskom‘s newly established Raptor Fusion Centre which focus on addressing high-impact cases of organised crime, infrastructure sabotage and economic offences within strict turnaround times. (e) Cases where 80.00 50.82 Cases where recommendations emanating from forensic investigations have been fully recommendations implemented are measured on the percentage of disciplinary referrals that have been tabled emanating from with the presiding officer of the disciplinary hearing within 90 calendar days. forensic investigations The focus on addressing and finalising disciplinary recommendations relating to matters from have been fully prior years and high-priority matters limited capacity to deal timeously with recommendations implemented, % on more recent cases. The establishment of a dedicated project management office has been approved to accelerate the resolution of disciplinary cases and sanctions arising from internal and external forensic investigations. (f ) Transmission lines 423.0 270.8 Performance was negatively affected by procurement delays which resulted in later‑than‑planned installed, km contract awards on key projects. The most significant shortfall occurred on the Ariadne–Eros 400kV line, where contractor financial constraints and underperformance severely restricted progress with only 29km achieved against a target of 165km. Corrective actions are being implemented, including addressing contractor financial constraints through revised payment terms, strengthening construction teams through improved supervision and work sequencing as well as using multiple contractors on lines. An incubation programme is planned to increase the number of local suppliers, while international suppliers will be prequalified to further broaden the supplier base. (g) Smart meters 800 000 610 223 Operational disruptions, primarily driven by violent community incidents in certain operating installed and units, prevented planned installations and resulted in the diversion of resources to alternative commissioned, areas. Community stoppages prevented the installation of approximately 150 000 smart number meters during the year. Flooding in Mpumalanga and KwaZulu‑Natal further constrained execution due to site inaccessibility. Engagement with the Department of Electricity and Energy is underway to strengthen community participation initiatives and support improved execution. 6 Ref Key performance Target Actual Reason indicator and unit 2026 2026 (h) Digitalisation of 60 45 The shareholder compact for 2024 and 2025 measured the blockchain adoption rate, with the procurement Eskom achieving 20% progress by 2025. The blockchain adoption rate KPI was amended in process, % the 2026 shareholder compact to measure the rate of digitalising Eskom’s procurement management processes. The KPI has a cumulative multi-year target which required 40% completion of the programme by 2025 and 60% by 2026, followed by 70% completion in 2027 and 100% in 2028. The prior year actual reflects the blockchain adoption rate as required in the 2025 shareholder compact. The relevant processes associated with the amended KPI was not fully operationalised for the reporting period as it was affected by governance and definition changes coupled with delays in finalising the revised KPI design and implementation approach. The following key deliverables have been completed based on the revised implementation approach: • Conduct research to the adoption of blockchain and analysis of the use case recommendations from Eskom. • Establishment of governance and other support structures including change management practices. • Approval of programme funding for a digital procurement platform as well as procurement scope, strategy and related documentation. • Issuing of the request for proposal to the market. • Successful go-live of the first two phases (including commodities with an online presence and a proof of value for suppliers with publicly available prices) of the three phases of artificial intelligence commodity market pricing. The target of 60% for 2026 was not met, with tender evaluation, approval and contract award as well as onboarding of the implementation partner not having been completed. Remedial actions have been implemented including finalisation of the KPI definition, alignment with the broader digital strategy and execution of an agreed implementation plan. An expedited delivery plan is being implemented to acquire a solution and implementation partner in 2027, with the aim of concluding the programme in 2028. (i) Establishment of Construction 52.5 The establishment of the Komati copper recycling plant KPI is measured based on several the Komati 100% project milestones, including approval of the business case in the first quarter (contributing copper recycling complete 25% relating to four activities), conclusion of procurement in the second quarter (contributing plant, % 30% relating to six activities) and construction at 50% complete in the third quarter (contributing 30% relating to site establishment) and 100% completion in the fourth quarter (contributing 15% relating to plant delivery). Initial project delays arose due to a ministerial directive requiring an independent assessment of the suitability of Komati power station for alternative combustion technology. Further delays were experienced due to the late appointment of an owner’s engineer which was necessary to validate project scope and confirm recoverable copper volumes. The project progressed through key development phases despite the delay. Progress of 52.5% was achieved against the overall project milestones for the year including completion of a business case, securing investment approval and identification of a technically capable supplier through a competitive procurement process. Uncertainty regarding copper availability from Komati units resulted in a pause in implementation to avoid premature commercial commitments. Construction had not commenced by year end and the business case is being revised to consider alternate copper sources and feedstock options to strengthen the long-term viability of the project. (j) New generation 95 – Performance of the battery energy storage systems project was negatively affected by capacity added contractor underperformance and contractual challenges resulting in no new renewable (renewables), capacity being installed in 2026. MW Commissioning of 94.5MW storage capacity was targeted by year end at Skaapvlei (80MW), Paleisheuwel (9.5MW) and Graafwater (5MW) sites under phase 1 of the battery energy storage systems project. The contractor for these projects failed to complete the project within the deadline due to internal challenges experienced by the contractor, resulting in claims against the contractor and the cessation of all site activities from December 2025. Recovery efforts have not been successful despite remedial interventions. Several strategic interventions are underway to ensure that work resumes. Contingency options are being assessed in parallel, including contract termination and appointing replacement contractors. 7 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Report of the audit committee The audit committee (the committee) presents its report in terms of the requirements of the PFMA, the Companies Act (section 94(7)(f )) and other applicable regulatory requirements as well as in accordance with the King IV TM for the financial year ended 31 March 2026. The requirements of the King V TM Report on Corporate Governance for South Africa (effective from 1 January 2026) were considered where relevant. 1. Mandate and terms of reference The committee, as defined in its mandate, fulfils statutory duties and assists the Board in its corporate governance duties by overseeing financial management, reporting and disclosure, internal control as well as the internal and external audit functions. The committee adopted appropriate formal terms of reference as its charter, regulated its affairs in compliance with this charter and discharged all its responsibilities contained therein. The committee members were appointed in December 2025 after the tenure of the reconstituted Board commenced on 1 December 2025. The committee in its present composition therefore held two of the eleven committee meetings convened during the financial year. In discharging its responsibilities in respect of the period from 1 April 2025 to 30 November 2025, the committee did not only rely on its own direct observation. It satisfied itself instead by reviewing the minutes, papers and resolutions of the predecessor committee by considering the formal handover report prepared for the reconstituted Board and through induction sessions with management and assurance providers on the significant matters that had arisen and related resolution and/or actions underway. The committee is satisfied that these procedures provide a reasonable basis for the conclusions expressed in this report in respect of the full financial year. Information about the mandate, membership composition and attendance of meetings of the committee is set out in the governance and remuneration report which forms part of the suite of reports accompanying the 2026 integrated report. 2. Execution of functions The committee activities aim to support and promote the safeguarding of Eskom’s information assets, the operation of adequate systems, control processes and the preparation of accurate financial reporting and statements in compliance with all legal requirements and accounting standards. The committee oversees the combined assurance model activities to support effective internal control processes which aim to provide reasonable assurance that the group’s financial and non-financial objectives are achieved and the group’s suite of externally published reports (as detailed in the integrated report) are accurate and in accordance with the applicable frameworks and standards. The committee considered information, insights and explanations provided by management, management’s experts, the internal audit and forensic departments as well as discussions with the independent external auditors. The committee encouraged rigorous challenging of internal control, accounting, disclosure matters and compliance to legislation in carrying out its functions and to conclude on key issues during the year. 2.1 Internal control The committee assists the Board with the oversight of the internal control system and implemented processes to actively oversee, consider and monitor, inter alia, the following in the conduct of its duties: • Effectiveness of the systems of internal control. • Improvements in the operational and financial reporting control environments. • Internal financial control and business risk management relating to financial reporting including: – Fraud and information technology (IT) risks relating to financial reporting and if they were satisfactorily addressed. – Progress on investigations, control breaches and security incidents from prior years and matters within the scope of the committee including fraud, misconduct or conflict of interest of employees. • Compliance with legal and regulatory provisions including: – Monitoring and reviewing legal matters with material impact on the group. – Reportable irregularities raised by the external auditors, with managements' actions to address challenges and prevent reoccurrence. – Compliance with relevant laws and regulations. • Appropriateness of the combined assurance to address significant risks facing the group. 2.1.1 Effectiveness of internal controls The committee acknowledged that the design of the internal control system is generally adequate and provides a structured framework to support governance, risk management and operational effectiveness. The committee noted the effort by management through the audit recovery programme to implement control enhancements to remedy identified control weaknesses and improve the operational effectiveness of the controls despite the material control deficiencies that still require sustainable remediation in key operational and financial areas. Ongoing oversight and enhancement continued in the information technology and operational technology control environments. Notable improvements in the online vending system (OVS) environment include the migration of OVS infrastructure to a more secure environment, supported by real-time detection and monitoring. Cyber security risk mitigation measures include enhancements to the cyber security infrastructure, strengthened leadership and the ongoing development of a group wide cyber security strategy. The use of legacy systems remains an area of concern. The committee noted that additional controls have been implemented to ensure that risks are managed and that a detailed replacement plan for legacy systems are underway. Consequence management remains a significant area for improvement to address the identified instances of crime, fraud and corruption and drive an ethical and effective controls culture. The committee noted the actions taken to strengthen forensic investigations, related legal processes as well as other internal and external investigations into allegations of crime, fraud and corruption. This was supported by internal structural changes, a deliberate drive to increase resources and improved quality and timeous delivery by external service providers. The committee recognises that Eskom is still dependent on law enforcement agencies and the justice system to timeously execute on arrests and convictions, but where management has control, the committee, supported by the Board, has increased focus and attention on the execution of the interventions to address the backlog of investigations and consequence management matters. The committee concluded that the system and process of risk management and mitigating actions to address the internal controls deficiencies related to financial reporting, including the risk of crime, fraud and corruption, are generally adequate for identifying, managing and reporting risks. The ongoing strengthening of the related internal controls remains a focus area. The committee concluded that compensating measures are in place to ensure that the financial records may be relied upon for the preparation of the financial statements and accountability for assets and liabilities are maintained. 8 2.1.2 Compliance with legal and regulatory requirements The committee noted the improvement in compliance particularly relating to PFMA requirements supported by ongoing enhancements in reporting structures, systems, controls, resources, policies and procedures. The committee noted that improvements in controls and focused action has resulted in a reduction in qualification areas with only the audit qualification regarding the PFMA records that were not complete in line with legislative requirements relating to irregular expenditure continuing in 2026, mainly due to a backlog in finalising matters under assessment and determination. Only R28 million of the total R4.9 billion irregular expenditure incurred during the year related to new matters, while the remainder resulted from existing multi-year contracts that will continue to attract irregular expenditure until condoned or removed. The committee acknowledged that four reportable irregularities were closed during the year and that certain reportable irregularities would reoccur and remain open until all related aspects have been concluded as it takes time to resolve because of the inherent nature thereof, such as environmental regulatory compliance. Refer to note 53. The committee also acknowledged Eskom’s overall assessment of the implementation of the King IV TM principles and practices which reflects a governance environment that improved but remains in transition. Initiatives are underway to address focus areas where some of the principles have not been fully or effectively applied. The committee acknowledged that significant shortcomings, in particular internal control deficiencies, were identified by the external auditors and the Auditor-General of South Africa (AGSA). The committee noted that although progress has been made through the audit recovery programme to strengthen controls and reduce audit findings, that it remains a key focus area for improvement. 2.1.3 Combined assurance The committee is satisfied that Eskom’s combined assurance framework is appropriately designed and that its coverage of the group’s significant risks is adequate. However, the committee is not yet satisfied that the framework operates effectively in practice. Significant control deficiencies persisted during the year in key financial disciplines described above, and their persistence indicates that first-line monitoring and the timely identification and remediation of control failures are not yet functioning as the framework contemplates. The consequence is a continued reliance on external assurance in areas where internal assurance should be sufficient. The committee has therefore directed that a combined assurance maturity assessment be performed, commencing in the 2027 financial year. The scope of the assessment include the structure, operating model and capacity of the internal audit function as well as the assurance architecture required by the group structure to support the unbundling strategy. The structure and process of combined assurance, particularly the internal audit function, compliance management and assurance and risk management will be reviewed to establish a sustainable assurance environment. Enhancements are expected to improve the accountability and monitoring of controls including consistent execution, timely identification and remediation of control deficiencies, mitigation of the risk of control circumvention, reducing the recurrence of audit findings and promoting the sustainable effectiveness of business processes and internal controls supported by robust risk management. The committee will monitor the progress of the assessment and effectiveness of the enhancements at each meeting. 2.2 Internal audit The committee is responsible for overseeing the internal audit function that reports functionally to the committee, and considered, inter alia, the following in the conduct of its duties: • Internal audit charter, three-year rolling internal audit plan, independence and performance of the internal audit department including the group chief audit executive. • Expertise, resources and experience of the internal audit department, including the group chief audit executive. • Risk-based internal audit plan that has been enhanced going forward to better align with the committee mandate which will include provision of assurance to the committee on the effectiveness of the management initiatives to address the significant control deficiencies emanating from external audit findings. • Compliance with its mandate including feedback on the outcome of internal audit reviews. • Status of corrective action taken by management in response to significant internal audit findings. • Cooperation and coordination by internal audit with external auditors. The committee is satisfied that the group chief audit executive and internal audit function is independent and operates in compliance with applicable professional standards. The committee noted that the external quality assessment in June 2025 rated the internal audit function as “Generally Conforms” with the International Standards for the Professional Practice of Internal Auditing. The committee is reviewing the effectiveness of the internal audit function in relation to its support of the committee in the execution of its mandate particularly in the context of the existing control environment. The focus, capacity and capability of the function will form a significant part of the combined assurance maturity assessment. 2.3 External audit The committee is responsible for recommending the appointment of external auditors as well as overseeing the external audit process and considered, inter alia, the following in the conduct of its duties: • Appointment of the external auditors in terms of the Companies Act (tabled at the annual general meeting for approval), Johannesburg Stock Exchange Debt and Specialist Securities Listings’ Requirements and other applicable legal and regulatory requirements. • External audit plan, external audit fees (budget and actual) and terms of engagement of the external auditors, including adherence to the practice of not allowing the external auditors to provide non-audit services (unless pre-approved by the committee) to ensure the independence and objectivity of the external auditors. • Quality and effectiveness of the external audit as well as the independence and objectivity of the external auditors, including the tenure of the audit firm and the rotation of the engagement partner. Deloitte & Touche was appointed as external auditors from 2022 with Mr AJ Dennis as the lead engagement partner for the 2022 to 2026 financial years. • Any relevant decision letters, findings and remedial explanations issued by the Independent Regulatory Board for Auditors (IRBA) as well as any summaries and explanations made available by the external auditors to the committee. • Feedback on the outcome of the external audit, including the qualification and material findings raised in the audit opinion, reportable irregularities, identified accounting, sustainability and auditing concerns as well as recommendations for improvement. • Feedback from the AGSA resulting from their oversight of the external audit process including review of audit work on identified risk areas and understanding of the group to identify good practises for improved governance, accountability and building of public confidence in Eskom. The committee is satisfied with the independence and objectivity of the external auditors based on section 94(8) of the Companies Act and with the quality and effectiveness of the external audit. 9 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Report of the audit committee continued 2. Execution of functions (continued) 2.4 Oversight of financial and non-financial reporting and disclosure The committee is responsible for providing oversight on financial management, reporting and disclosure and considered, inter alia, the following in the conduct of its duties: • Appropriateness of the expertise and experience of the group chief financial officer as well as the expertise, resources and experience of the finance function. • Review of the annual financial statements including going-concern assessment, significant matters, related assumptions, key judgements and use of experts. • Integrity of the information reported in the integrated report and disclosure of non-financial issues, including sustainability and PFMA related information, to ensure that it is reliable and does not conflict with the financial information in the annual financial statements. • Adequacy, reliability and accuracy of financial information provided to users of such information. The significant matters relating to the annual financial statements that were considered and continued to be key focus areas for monitoring and reporting include the following: Significant Consideration matter Going-concern The committee considered management’s going-concern assessment, including the group and company’s latest cash flow assessment forecasts, liquidity position, solvency, funding requirements, debt service obligations and stress-tested scenarios for at least 12 months from the date of approval of the annual financial statements. In doing so, the committee considered the material uncertainties and key assumptions disclosed in note 3.2, including tariff adequacy, sales volumes, municipal arrear debt, operational performance, environmental compliance obligations, restructuring of the electricity industry and future funding availability. Based on the information presented, the mitigating actions identified by management and the continued availability of adequate resources and support, the committee concluded that the going-concern basis of accounting remains appropriate for the group and company. The committee therefore recommended to the Board that the annual financial statements be prepared on the going-concern basis. The committee considered the current work being undertaken by the ERTT under the direction of the President of South Africa. The committee took comfort that the Phase I Report of the ERTT recognised the importance of protecting the financial sustainability of Eskom which includes addressing lender requirements, financing arrangements and contractual obligations during implementation as well as concurring that municipal arrear debt is a critical challenge and strategic priority in their proposal to establish a dedicated workstream to develop sustainable solutions to address this challenge. Consideration of The committee considered the appropriateness of the CGUs for the group and that the Eskom company (generation and cash generating distribution segments), NTCSA (transmission segment) and Eskom Rotek Industries SOC Ltd (ERI) have been identified as a single unit (CGU) and CGU (referred to as the Eskom CGU) as the segment operations continue to function within a regulated and operationally assessment of integrated electricity business, do not generate cash inflows independently and that an active market for the outputs of the individual possible operations do not exist. impairment The committee considered the inputs, assumptions, key judgements and sensitivities applied in the impairment assessment of the Eskom CGU. The committee noted that the recoverable amount (determined based on the higher of the fair value less costs of disposal and value in use) of the Eskom CGU, based on the value in use, is higher than the carrying value and is comfortable that there is no impairment loss on the Eskom CGU. The committee acknowledged that the identification of the Eskom CGU may be impacted in the future by the ongoing structural transformation including the further unbundling of electricity industry participants (independent market operator and legal separation of generation and distribution), establishment of future transmission system and market operation arrangements, increased participation by independent market participants and the development of additional generation and transmission infrastructure outside of the Eskom group. The committee concluded that the structural transformation is based on the principle that all the unbundled entities will be financially sustainable and viable post unbundling. Refer to note 3.3. Valuation of The committee considered the inputs and assumptions used in the valuation of financial instruments including derivatives held for risk financial management and embedded derivatives. The committee noted that management made use of independent experts to assist with instruments and the valuations to ensure alignment of the valuation curve methodology in determining the fair values of the financial instruments to hedge accounting market practice. The committee acknowledged that the valuation of these instruments is complex and that it is important that Eskom has access to valuation professionals with the required specialised skills and knowledge. Internal control The committee considered the control deficiencies raised by the internal and external auditors. The committee is satisfied that environment mitigating and compensating measures are in place to ensure that the financial records may be relied upon for the preparation of the financial statements. Refer to section 2.1.1. Contingent The committee considered and noted the improvement in the preventative controls, security changes and other systems changes liability arising implemented during the current year to address the control deficiency identified in 2024 relating to the creation of illicit tokens. from illicit Refer to section 2.1.2. creation of prepaid tokens PFMA reporting The committee considered the actions and improvements made to address the control deficiencies regarding PFMA compliance and reporting. Refer to section 2.1.2. 10 The committee is satisfied that the group chief financial officer has the appropriate expertise and experience required for the role. The committee is satisfied that management is making meaningful progress in strengthening the finance function across the group to address the persistent significant control deficiencies emanating from the audit processes through a structured programme focused on capability, capacity, resilience and digital transformation over the next three years. Dedicated resources, executive-sponsored steering committees and enhanced governance oversight have been established to support both current operational priorities and the finance transition required for Eskom's unbundling journey. Progress is closely monitored through management and Board oversight structures. Significant recruitment and targeted secondments to critical areas were undertaken in the past year to strengthen key capabilities, address capacity constraints, improve succession coverage and reduce key-person dependencies. These initiatives, together with ongoing capability-building efforts, are enhancing the sustainability, resilience and long-term effectiveness of the finance function. The committee concluded that the annual financial statements met the fair presentation requirements of the PFMA, Companies Act and IFRS® Accounting Standards and that key judgements, estimates and the accounting treatment applied to significant transactions in the annual financial statements were appropriate. The committee is also satisfied that the related financial and non-financial disclosures have been adequately considered and addressed in the annual financial statements. 2.5 Audit committee of wholly owned subsidiaries The committee performs the functions required by the Companies Act on behalf of the wholly owned subsidiaries of the group, except for NTCSA, Escap SOC Ltd (Escap) and Nqaba Finance 1 (RF) Ltd which have independent audit committees. Subsidiary assurance committees assist the Eskom audit committee in fulfilling its oversight responsibilities relating to subsidiaries in terms of the Subsidiary Governance Framework that sets out the governance principles and processes for the effective management of wholly owned subsidiaries in the group. The committee engaged with and reviewed the activities and feedback of the subsidiary assurance committees during the year and was satisfied to recommend the subsidiary annual financial statements for the year ended 31 March 2026 to the relevant subsidiary Boards for approval. 3. Recommendation of the annual financial statements The committee is satisfied, notwithstanding the aspects considered and recommended for improvements, that nothing significant has come to the attention of the committee to indicate a material breakdown in the functioning of the controls, procedures and systems and that the controls are appropriate with compensating measures to ensure compliance with the requirements of the Companies Act, the PFMA and IFRS Accounting Standards. The committee has evaluated the annual financial statements of Eskom and the group for the year ended 31 March 2026 and supports the submission of the annual financial statements, based on the information provided to it, considers that they comply, in all material respects, with the requirements of the Companies Act, the PFMA and IFRS Accounting Standards. The committee considered the independent auditors’ report and the qualified opinion relating to completeness of information disclosed in terms of the PFMA and that, except for this qualification, the consolidated annual financial statements are fairly presented in terms of IFRS Accounting Standards. The committee concluded that the information contained in the integrated and sustainability reports is reliable and does not contradict the information in the annual financial statements. The committee concurs that the adoption of the going-concern premise in the preparation of the annual financial statements is appropriate. The committee has therefore, at its meeting held on 27 August 2026, recommended the adoption of the annual financial statements by the Board. TP Zondi-Mthembu Chair 30 August 2026 Statement by company secretary In terms of section 88(2)(e) of the Companies Act of South Africa, I certify that the company has filed with the Companies and Intellectual Property Commission all such returns and notices in terms of this Act, and all such returns appear to be true, correct and up to date. M Manjingolo Company secretary 30 August 2026 11 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries Report on the audit of the consolidated and separate financial statements Qualified opinion We have audited the consolidated and separate financial statements of Eskom Holdings SOC Limited and its subsidiaries (the group and company) set out on pages 26 to 126 which comprise the consolidated and separate statements of financial position as at 31 March 2026, the consolidated and separate income statements, consolidated and separate statements of comprehensive income, consolidated and separate statements of changes in equity and consolidated and separate statements of cash flows for the year then ended, as well as notes to the consolidated and separate financial statements, including a summary of material accounting policy information. In our opinion, except for the effects of the matters described in the basis for qualified opinion section of this auditor’s report, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of the Eskom Holdings SOC Limited and its subsidiaries as at 31 March 2026, and their consolidated and separate financial performance and consolidated and separate cash flows for the year then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS) and the requirements of the Public Finance Management Act, 1 of 1999 (PFMA) and the Companies Act, 71 of 2008 (Companies Act of South Africa). Basis for qualified opinion Irregular expenditure The public entity did not fully record irregular expenditure in note 52.1 to the consolidated and separate financial statements, as required by section 55(2)(b)(i) of the PFMA. This was due to inadequate systems of internal control to timeously detect and record this expenditure in the consolidated and separate financial statements, as well as inadequate controls to ensure appropriate assessment of potential irregular expenditure arising from non-compliant supply chain management processes in the current and prior years. In addition, certain contracts where standardised rates were mandated by the public entity, resulted in a non-compliance with supply chain management processes. As a result of the weaknesses identified and described above, we were unable to determine the full extent of the misstatement of irregular expenditure disclosed in terms of section 55(2)(b)(i) of the PFMA stated at R4 907 million (2025: R10 874 million restated) and R3 525 million (2025: R9 416 million restated) in note 52.1 to the consolidated and separate financial statements respectively, as it was impracticable to do so. Context for the opinion We conducted our audit in accordance with the International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated and separate financial statements section of our report. We are independent of the group and company in accordance with the Independent Regulatory Board for Auditors’ Code of Professional Conduct for Registered Auditors (IRBA Code), as applicable to audits of financial statement of public interest entities, and other independence requirements applicable to performing audits of financial statements in South Africa. We have fulfilled our other ethical responsibilities in accordance with the IRBA code and in accordance with other ethical requirements applicable to performing audits in South Africa. The IRBA code is consistent with the corresponding sections of the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (Including International Independence Standards). We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. In terms of the IRBA Rule on Enhanced Auditor Reporting for the Audit of Financial Statements of Public Interest Entities, published in Government Gazette No. 49309 dated 15 September 2023 (EAR Rule), we report: Final materiality The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error, and they are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated and separate financial statements. Our determination of materiality is a matter of professional judgement and is affected by our perception and understanding of the financial information needs of intended users, which is the quantitative and qualitative factors that determine the level at which relevant decisions taken by users would be affected by a misstatement. These factors helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated and separate financial statements as a whole. Based on our professional judgement, we determined final materiality for the consolidated and separate financial statements as follows: Materiality Group: R2 billion Company: R1.8 billion Basis for determining A key judgement in determining materiality is the appropriate benchmark to select, based on our perception of the needs of materiality shareholders. We considered which benchmarks and key performance indicators have the greatest bearing on shareholder decisions. In line with Auditor General of South Africa (AGSA) methodology, we determined that expenses remained the key benchmark for the group and company. Based on our professional judgement, for the group we determined materiality to be R2 billion which represents 0.8% of selected expenses. For the company, we determined materiality to be R1.8 billion which represents 0.7% of selected expenses. Group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, considering the structure of the group and the accounting processes and controls. Our group audit was scoped by obtaining an understanding of the group and its environment, including the structure and organisation of the group and company, and assessing the risks of material misstatement at the group and company level. 12 We selected components at which audit work in support of the group and company audit opinion needed to be performed in order to provide an appropriate basis for undertaking audit work to address the risks of material misstatement. Our selection was informed by considering the component’s contribution to relevant classes of transactions, account balances or disclosures. Based on our assessment, we performed work at nine components, representing the group’s most material operations. For company, we performed work at five components. The following audit scoping was applied: • Four and three components were audits of the component's financial information for group and company respectively. • Five and two components were audits of one or more classes of transactions, account balances or disclosures for group and company respectively. Residual values were addressed by risk assessment and analytical procedures performed at a group level. These components account for 98% of the group’s total assets and 100% of the group’s revenue. In addition, these components account for 83% of the company's total assets and 93% of the company’s total expenses. Material uncertainty related to going concern We draw attention to the matters below. The opinion is not modified in respect of these matters. We draw attention to note 3.2 in the consolidated and separate financial statements which highlights several indicators of material uncertainty regarding the group and company’s ability to continue as a going concern. The group and company are faced with significant challenges. These include: • Eskom remains in a debt-dependent liquidity position across the short and medium term with continued reliance on government support and new debt to fund the significant capital expansion. • Noting that longer-term liquidity after the debt relief period remains at risk because of financial sustainability challenges, including an inadequate tariff path and structure, reduced sales volumes, high debt service costs, escalating municipal arrear debt, above-inflation cost increases, and the impact of crime, fraud and corruption, including revenue losses from illegal electricity connections and illicit prepaid electricity tokens. • The impact of overdue electricity receivables, mainly due to growing municipal arrear debt, and the limited success from the municipal debt relief arrangement. This remains a material risk and places significant strain on the going-concern assessment. • The timing and dependency risks associated with legal separation, market reform and the corporatisation or operationalisation of sector entities, including the establishment of an independent transmission system operator and the deferred corporatisation of the distribution business. • The delays in completing the Medupi flue-gas desulphurisation plant by June 2027 may result in the early settlement or prepayment of certain related funding arrangements. The group and company is continuing discussions with the relevant lender regarding an extension of the existing waivers. • Eskom is awaiting National Treasury for the finalisation of the conditions associated with the Debt Relief Act post 31 March 2026. • Despite continued improved generating plant performance as well as the ongoing positive and incremental impact of the Generation Recovery Plan, Eskom continues to operate a significantly aged generation fleet, and plant performance therefore remains a key risk to manage. Failure to mitigate this risk could negatively impact cash flow through lost revenue and increased costs. The generation capacity of the group remains a critical focus area to ensure that appropriate steps are being taken to manage performance. • The revenue and resultant cash flow impact of customer and market developments such as negotiated pricing arrangements (NPAs) with certain energy- intensive customers, together with the related approval by the National Energy Regulator of South Africa (NERSA) of a 62c/kWh tariff with expected increase in electricity consumption and certain other customers moving into care and maintenance in March 2026. There are several mitigating strategies and actions disclosed in note 3.2, however, there are various dependencies and internal and external uncertainties which could impact the ability to deliver against these strategies in the timelines anticipated. Certain of these plans and strategies may be impacted by the changing energy landscape, while these developments introduce uncertainty into the going-concern assessment and cannot currently be reliably modelled due to uncertainty over their timing and implementation, the Eskom Restructuring Task Team (ERTT) Terms of Reference requires Phase II to develop solutions that support the long-term financial sustainability of the entity. Accordingly, the viability of any future structure is expected to be assessed with reference to its ability to achieve financial sustainability. This is indicative of the existence of a material uncertainty that may cast significant doubt on the group and company’s ability to continue as a going concern. In terms of the EAR Rule, we report on how we have evaluated management’s assessment of the group and company’s ability to continue as a going concern. Our procedures in relation to going concern included, but were not limited to: • Evaluating the design and implementation of the key controls related to management’s assessment and conclusion on going concern. • Evaluating management’s prepared forecasts and budgets, including evaluating the reasonableness of key assumptions, with a particular focus on projected revenues, costs, capital expenditure (CAPEX), and available funding mechanisms. • With the assistance of our business restructuring specialists, applying sensitivities to certain of management’s inputs and assumptions, including incorporating capital-growth adjustments for arrear municipal debt and evaluating the utilisation of Treasury Investments to the extent that the funds are not totally ring-fenced. • Testing the mathematical accuracy of management’s cash flow forecasts and comparing them to historical performance and post-year-end results where available. • Reviewing the terms of existing financing arrangements, including compliance with debt covenants and the availability of undrawn facilities. • Evaluating the debt relief assumptions and the impact of this on the financial sustainability of the group. • Assessing the adequacy of disclosures in the going concern note as to whether they appropriately reflect the key areas of uncertainty identified, including consideration of subsequent events, such as the release of the ERTT Phase I report. • Considering the impact of any significant events or conditions identified during the audit that may affect the group and company’s ability to continue as a going concern. 13 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Based on the procedures performed, we found that management’s assessment was reasonable and that the disclosures in the financial statements appropriately reflect the group and company’s circumstances in relation to going concern. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated and separate financial statements for the current period. These matters were addressed in the context of our audit of the consolidated and separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for qualified opinion and the Material uncertainty related to going concern sections, we have determined the matters described below to be the key audit matters to be communicated in our report. The key audit matters identified are applicable to the consolidated and separate financial statements. In terms of the EAR Rule, we are required to also report the outcome of audit procedures or key observations with respect to the key audit matters, and these are included below: Key audit matters How the matter was addressed in the audit Impairment assessment of property, plant and equipment and indefinite useful life intangible assets As disclosed in note 3.3, the directors assessed property, plant and In evaluating the impairment of property, plant and equipment, we reviewed the value equipment for impairment in line with IAS 36 Impairment of Assets in use model prepared by management, with a particular focus on the assumptions (IAS 36). The recoverable amount of a group of assets, or cash with the most significant impact. This included the forecasted sales price, the generating unit (CGU), is to be measured whenever there is an forecasted available generation capacity and corresponding market demand, an indication that the value of the group of assets or the CGU may be increase in primary energy costs, the implementation of carbon tax, discount rates, impaired. Significant judgement is required by management in the long-term growth rate, and consistent implementation of the pricing methodology assessing the impairment of the group of assets or the CGUs, which as identified by management. is determined with reference to fair value less cost to sell or the value in use, based on the cash flow forecast for the CGU. Our procedures to address the key audit matter included the following: • Evaluated management’s updated accounting position around the appropriateness Improved generation performance, together with increased customer of the identified cash generating unit within the group and company. self-generation and growing wheeling activity across Eskom and • Evaluated the design and implementation of the key controls relating to the municipal networks, has contributed to lower grid demand and preparation and review of the group’s cash flow forecasts and corporate plan used periods of excess supply. This creates uncertainty regarding future in the respective impairment model. electricity sales volumes, revenue recovery and the utilisation of • Recalculated the recoverable amount of the CGU. Eskom’s generation fleet, which may affect the achievement of forecast cash flows. • Assessed the appropriateness of the disclosures and sensitivity analyses presented. • With the assistance of our internal valuation, pricing, engineering, and accounting The ongoing liberalisation of the electricity market continues to create specialists, we performed the following: uncertainty for Eskom. While National Transmission Company South – Critically evaluated whether management’s assertion regarding a single CGU and Africa SOC Ltd (NTCSA) has obtained a market operator licence and the recoverable amount calculation complies with the requirements of IAS 36 is progressing towards an expanded role in the evolving market (including the impact of the transmission system operator separation on the structure, the long-term pricing framework has not yet been finalised. CGU assessment). Although tariffs for the current period are determined under the – Assessed the logic and mathematical accuracy of the valuation models against Multi-Year Price Determination (MYPD) methodology, uncertainty best practice and agreed relevant data to the latest long-term business plans, remains regarding the future tariff-setting approach and recovery of whilst also performing a retrospective comparison of forecasted cash flows to Regulatory Clearing Account (RCA) balances. The most recent report actual past performance and previous forecasts. from the ERTT and the President's endorsement thereof, increases the uncertainty around the viability of the remaining components in – Benchmarked the sustainable EBITDA margin and growth rates, with a focus on the future of Eskom. management’s forecast price path in comparison to the historic MYPD outcomes. – Assessed the weighted average cost of capital (discount rate) and the alignment The key assumptions with the most significant impact on the cash of this rate to the regulatory model. flow forecasts were: – Assessed the forecasted available generation capacity, specifically the energy • Identification of the CGU(s) in light of ongoing unbundling and wheel, including the forecasted impact of embedded self-generation and external market reforms. wheeling. • Revenue volumes, driven by electricity demand, self-generation, – Critically evaluated key inputs (including EAF, OCGTs and IPPs) within the wheeling and generation capacity. production plan forecast period until 2050 and assessed the impact of a recalibration of the EAF delta to moderate the growth trajectory and extend the • Revenue tariffs, based on approved MYPD determinations, with timeline before plateaus are reached. uncertainty regarding future pricing methodologies and RCA recoveries. – Assessed the reasonableness of management’s forecasted volumes by corroborating key assumptions against external market data and industry • Long-term growth and EBITDA assumptions. forecasts obtained from third party sources, and by evaluating the forecast load • Generation performance, including Energy Availability Factor factors used in the preparation of management’s forecast. (EAF), Energy Utilisation Factor (EUF), reliability of the ageing • With assistance from our internal tax specialists, we assessed management’s plant, capacity additions and potential reliance on Independent application of carbon tax legislation, assumptions and calculations used in Power Producers (IPPs) and Open Cycle Gas Turbines (OCGTs). determining the carbon tax liability. • Future carbon tax and environmental compliance costs. Based on the outcome of the respective cash flow models, the directors did not record an impairment charge for the current year. Due to the significant estimation uncertainty and subjective nature of the assumptions used in these estimates, this was considered a key audit matter. 14 Key audit matters How the matter was addressed in the audit Impairment assessment of property, plant and equipment and indefinite useful life intangible assets (continued) Based on the procedures performed, we concurred with management's conclusion that the group and company comprised a single CGU at year-end. We found the discount rate and other key assumptions used in the impairment model to be within acceptable ranges determined with reference to independent market data and our valuation specialists' expectations. We noted that the recoverable amount remains significantly dependent on NERSA approving future tariffs broadly in line with the Regulatory Electricity Pricing Methodology. Given the uncertainty arising from recent tariff determinations and the group's historical recourse to legal processes in response to certain NERSA decisions, this remains a key area of estimation uncertainty. We further noted that the ongoing electricity market reforms, including the ERTT initiatives, introduce uncertainty regarding the future structure of the electricity sector. As the timing, implementation and ultimate outcomes of these reforms remain uncertain, the determination of CGUs may require reassessment and could result in different conclusions in future periods. We concluded that the disclosures relating to the key assumptions, estimation uncertainties, dependencies and sensitivities applied in the impairment assessment are appropriate. 15 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Report on the audit of the consolidated and separate financial statements (continued) Key audit matters (continued) Key audit matters How the matter was addressed in the audit Impact of the Eskom’s ongoing forensic investigation into the illicit creation of prepaid tokens (Illicit prepaid tokens) Eskom recognises prepaid electricity revenue through its Online Our audit procedures to address the key audit matter were as follows: Vending System (OVS) in accordance with IFRS 15 Revenue from • Inquired of the relevant management to understand the preventative controls, security Contracts with Customers, with revenue deferred for electricity not changes and other systems changes implemented in the current year. yet consumed. Following a forensic investigation, in the prior year, • Assessed the competence, qualifications and objectivity of the group and company’s significant control deficiencies were identified within the prepaid IT external forensic experts, including an assessment of the scope of their investigation environment, including unauthorised privileged access used to and reviewing conclusions reached. generate illicit prepaid tokens. Although some weaknesses have been remediated, material control deficiencies remain, preventing • Engaged specialists with critical skills to undertake the relevant procedures. The Eskom from reliably determining the full extent of illicit tokens specialists include individuals in the fields /disciplines of information systems, cyber created and utilised. This creates an elevated risk regarding the and security forensics, data analytics, information system architects, legal, technical occurrence and completeness of prepaid revenue recognised accounting and technical auditing to assist the audit team to perform updated risk under IFRS 15. In addition, under IAS 37 Provisions, Contingent assessment procedures taking into account the impact on the current year’s audit. Liabilities and Contingent Assets, Eskom may have an obligation to • We obtained an updated understanding of Eskom’s prepaid IT ecosystem, including the provide electricity against illicit tokens, however, due to unreliable system architecture, key hardware and software components, underlying processes, data and system limitations, management is unable to measure the controls, and interfaces with third party organisations. This included walkthroughs of potential liability with sufficient reliability, resulting in a contingent the end-to-end prepaid environment and relevant data centres to understand the liability disclosure. This was identified as a key audit matter due to operation of the ecosystem and associated control environment. its potential impact on prepaid revenue and contingent liabilities, • With the assistance of our IT and cyber incident response specialists, we evaluated and the significant audit judgement and specialist expertise management’s continued response to the security breach, including assessing required to assess the consequences of the control failures and management’s conclusions regarding the extent of the impact on the prepaid and system breach. broader IT environment. We also assessed management’s continued remediation actions implemented and the enhancements made to the IT security control environment in the current year. • We performed exploitation testing of the back-end infrastructure (network, storage, operating systems and hardware security modules) including the review of access logs and system configurations. • In addition, we performed front-end application testing which included evaluating general IT controls, segregation of duties, user access controls, and the effectiveness of related internal control activities. • Obtained independent confirmations from the National Vending Agents on total tokens sold and revenue earned for the financial year. This was reconciled to the prepaid revenue recorded and the commissions paid in the current year. • Using management’s forensic specialist data for the period October 2023 – October 2025 and using the forensic data collected by Eskom from November 2025 – March 2026, we engaged our data analytics specialists to determine the valid tokens, as well as the illicit tokens created. • Our data analytic specialists evaluated the available data from connected smart meters to assess the use of tokens, including illicit tokens. These meters remain but a fraction of the total population of prepaid meters. • Evaluated the accounting policy disclosure of prepaid revenue. • With the assistance of our accounting specialists, we evaluated the impacts arising from the continuous breach on the financial statements and evaluated the significant assumptions used by management to estimate the contingent liability and the disclosures thereof. We consider the related disclosures of the prepaid revenue accounting policy in note 2.19 and contingent liabilities in note 45.2 to be appropriate. 16 Key audit matters How the matter was addressed in the audit Material breakdown in financial reporting controls and resultant audit response Our audit identified a number of control deficiencies across various The persistent nature of the control deficiencies identified across the group required a entities, divisions, and reporting processes within the group. Although significant modification of our audit strategy and a substantial increase in audit effort. improvements were noted in certain areas during the current year, Given the reduced reliability of the control environment, we placed limited reliance on recurring control failures, processing errors, review exceptions, and internal controls and performed extensive substantive audit procedures across deficiencies in financial and performance reporting processes indicate significant classes of transactions, account balances and disclosures. that elements of the group's control environment lack understanding of the applicable reporting and compliance requirements and are not We assigned experienced senior audit personnel and engaged internal and external operating consistently at the level expected for an organisation of its specialists in areas requiring specialised expertise, significant judgement, or heightened size, complexity, and public accountability. fraud risk considerations. We also applied enhanced professional scepticism throughout the audit and used advanced data analytics to identify unusual transactions, trends, and Producing accurate and transparent annual financial statements is potential indicators of fraud, management override, or irregular conduct. essential for demonstrating sound financial management disciplines and maintaining stakeholder confidence. Our audit procedures included: • Reassessing audit risks and exercising enhanced professional scepticism in The deficiencies identified were not isolated to specific processes but determining the nature, timing, and extent of audit procedures. were observed across multiple areas of the organisation and • Re-evaluating materiality, scoping decisions, and control risk assessments in light of the frequently related to weaknesses in the design, execution, review, control deficiencies identified. ownership, and monitoring of controls. A significant number of audit • Performing audit procedures closer to year-end and extending audit testing over adjustments, review comments, and control exceptions identified significant account balances and disclosures. during the audit process suggest that preparer and reviewer controls are not consistently effective in preventing, detecting, and correcting • Critically reassessing key accounting estimates, judgements, and assumptions, errors on a timely basis. including consideration of prior-year estimates and management decisions. • Increasing sample sizes and the extent of detailed substantive testing beyond levels In addition, the audit highlighted opportunities to strengthen that would ordinarily be required in an effective control environment. accountability for control ownership, enhance coordination across the • Performing additional corroborative procedures and obtaining evidence from group's assurance functions, improve the effectiveness of root-cause independent sources where possible. remediation, and further develop technical capability in key governance • Assessing the adequacy and reliability of audit evidence obtained and performing and financial reporting disciplines. The observations also indicate a further procedures where evidence was insufficient or inconsistent. need for a stronger control-conscious culture in which controls are embedded within normal business operations and supported by Based on the procedures performed and the evidence obtained, we concluded appropriate challenge, oversight, and accountability at all levels of the that sufficient appropriate audit evidence was obtained to support our audit organisation. opinion notwithstanding the significant deficiencies identified in the group's control environment. Given the group's ongoing strategic transformation and unbundling initiatives, the effectiveness and sustainability of the control environment is of increasing importance to increase transparency and accountability in financial reporting. Weaknesses in the control framework increase the risk of material misstatements, unreliable financial and performance reporting, non-compliance with regulatory requirements, and governance failures. Accordingly, the design, implementation, and operating effectiveness of the group's control environment was considered a matter of audit significance and received significant audit attention. 17 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Report on the audit of the consolidated and separate financial statements (continued) Key audit matters (continued) Key audit matters How the matter was addressed in the audit Valuation of complex financial instruments The group and company are a party to certain derivative financial Our procedures to respond to the key audit matter included the following: instruments as disclosed in note 4.1 and note 17. These include • Evaluated the design and implementation of certain internal controls over the group embedded derivatives in supply contracts, and derivatives entered and company’s valuation of derivative financial instruments. into for risk management as described below: • Assessed the impact of the contract clauses called upon by the customers in the a) Embedded derivatives in supply contracts: In accordance with current year on the key inputs used in the valuation of the embedded derivative. IFRS 9 Financial Instruments, embedded derivatives that are not • Assessed the impact of information available prior and post year end on the closely related to the host contract are separately recognised valuation of the embedded derivative. and measured at fair value through profit or loss. Certain • Assessed the appropriateness of the proxies used in the valuation of the embedded electricity supply contracts entered into by the group and the derivatives in the absence of traded commodities. company have underlying instruments that are not closely • Assessed the appropriateness of the contract life of impacting the unwind of the related to the host electricity supply contract, such as commodity day-one liability associated to the embedded derivative. prices and foreign currencies. This has resulted in the recognition • Involved valuation professionals with specialised skills and knowledge, who assisted of embedded derivatives which have been measured at fair value in the evaluation of the group and company’s hedge documentation for certain through profit or loss, applying the guidance in IFRS 13 Fair Value contracts, for the purposes of determining whether the related accounting Measurement. treatment was in accordance with the requirements of the prevailing accounting b) Derivatives used for risk management: The group and company standards. entered into forward exchange contracts and cross currency • Involved valuation professionals with specialised skills and knowledge, who assisted swaps that are designated as hedging instruments. The group and in the evaluation of the group and company's hedge documentation for certain company apply the hedge accounting requirements of IAS 39 contracts, for the purposes of determining whether the related accounting Financial Instruments: Recognition and Measurement. In addition, treatment was in accordance with the requirements of the prevailing accounting the group and company are a party to derivatives which do not standards. qualify for hedge accounting but are used for economic hedging. • Reviewed and assessed the appropriateness of the hedge accounting policies The derivatives used for risk management are measured at fair adopted. value through profit or loss as required by IFRS 9. • Assessed the competence, qualifications and objectivity of group and company’s The valuation of both the embedded derivatives and the derivatives external specialists. used for risk management rely on complex valuations. Inputs include • For selected instruments, with the assistance of our valuation specialists we: estimated electricity consumption, forward curves for valuation – Challenged the appropriateness of the valuation methodology, inputs and adjustments, curve interpolation methodology, determination of technique used by the group and company in the valuation of the instruments, appropriate proxies, and forward rate calculation methodology. where relevant. The global commodity pressures and rising energy cost experienced – Reperformed the valuation using an independent model and compared the fair by customers along with complexities of the contract, has resulted value results to group and company’s valuation to assess the reasonableness of in the customers exercising some of the key clauses in the contract the model methodology and the output of model calculations. which has a direct impact on the valuation of the embedded – For derivatives used for risk management, evaluated the swap curves, overnight derivative. These inputs have a significant impact on the measurement indexed swap curves, ZAR, USD, and EUR foreign exchange basis adjusted of the derivatives. As a result, the valuation of the embedded curves and the ZAR CPI curves and reperformed the valuation of commodity derivatives, and derivatives used for risk management is a key forwards used to hedge various commodities. audit matter. With regards to the derivatives used for risk management, we identified a control deficiency impacting the accuracy of the valuation and hedge accounting entries processed resulting in misstatements. The misstatements identified during the audit were corrected, and the related disclosures reflected in the annual financial statements are appropriate. With regards to the embedded derivatives in supply contracts, a significant control deficiency was identified over the appropriateness of the review of the consumption assumptions utilised in the models. In addition, several differences were identified with the most material arising from the inadequate consideration of the forecast electricity consumption impacting the valuation of the embedded derivatives. The impact of these inaccuracies resulted in corrected misstatements on the evaluation of the instruments at reporting date and the valuation of the derivative asset. The misstatements identified during the audit were corrected, and the related disclosures reflected in the annual financial statements are appropriate. 18 Emphasis of matter We draw attention to the matters below. Our opinion is not modified in respect of these matters. Events after the reporting period We draw attention to note 48 in the consolidated and separate financial statements, which discloses several material events after the reporting period. Restatement of corresponding figures As disclosed in note 49, to the consolidated and separate financial statements, the corresponding figures for March 2025 were restated due to errors in the prior year. Investigations into possible corruption and related impact on capital projects We draw attention to note 2.4 in the consolidated and separate financial statements, which discloses the group and company’s accounting policy on the impact of corruption on the valuation of capital projects which states that once an investigation on the overpayment on capital projects is finalised and if required, an adjustment is made to the carrying value. Material losses: Non-technical energy losses As disclosed in note 52.3, to the consolidated and separate financial statements, material losses due to non-technical energy losses were incurred in the current and prior year. Other matter Departure granted to Eskom on finalising the assessment and determination of irregular, fruitless and wasteful expenditure In terms of section 79 of the PFMA, National Treasury granted Eskom Holdings SOC Ltd and its subsidiaries a departure from the requirements of paragraphs 4.1 and 4.12 of the PFMA Compliance and Reporting Framework, Instruction No. 4 of 2022/23. As a result of the departure granted by National Treasury, Note 52 to the Audited financial statements includes only those irregular, fruitless and wasteful expenditure matters for which the loss control function had completed the assessment test within the timelines prescribed by the departure. Consequently, irregular, fruitless and wasteful expenditure matters, identified through the audit process, internal audit and other mechanisms, have not been disclosed in Note 52. These matters would otherwise have been considered for disclosure had the departure not been applicable; however, the assessment and determination processes were still in progress and remained within the permitted 180-day period at the reporting date. Accordingly, the non-disclosure of the matters within the permitted 180 days period does not constitute a misstatement of the financial statements, as the accounting officer has applied the National Treasury-approved departure in accordance with section 79 of the PFMA. Responsibilities of the accounting authority for the consolidated and separate financial statements The board of directors, which constitutes the accounting authority, is responsible for the preparation and fair presentation of the consolidated and separate financial statements in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board, the requirements of the Companies Act of South Africa and PFMA, and for such internal control as the accounting authority determines is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated and separate financial statements, the accounting authority is responsible for assessing the group and company’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the accounting authority either intends to liquidate the group and company or to cease operations, or has no realistic alternative but to do so. Auditor’s responsibilities for the audit of the consolidated and separate financial statements Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated and separate financial statements. A further description of our responsibilities for the audit of the consolidated and separate financial statements is included in the annexure to this auditor’s report. This description, which is located at page 24, forms part of our auditor’s report. 19 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Report on the audit of the annual performance report Introduction and scope In accordance with the Public Audit Act 25 of 2004 (PAA) and the general notice issued in terms thereof; we must audit and report on the usefulness and reliability of the reported performance against predetermined objectives for the selected key performance areas presented in the annual performance report, being the shareholders compact performance section of the directors’ report. The accounting authority is responsible for the preparation of the annual performance report. We selected the following key performance areas presented in the annual performance report for the year ended 31 March 2026 for auditing. We selected key performance areas that measures the public entity’s performance on its primary mandated functions and that are of significant national, community or public interest. Key performance area Page numbers Purpose Achieve universal 4 Measurement and monitoring of key indicators specific to the operational efficiency within electricity generation access, availability, including energy availability at a power station level, the mass of particulates emitted from Eskom’s coal-fired affordability and quality power stations and the amount of raw water used for power generation. Measurement and monitoring of key indicators specific to the operational efficiency within electricity transmission including the measurement of transmission interruptions experienced. Measurement and monitoring of key indicators specific to the operational efficiency within electricity distribution including the measurement of distribution energy losses, the average duration and frequency of interruptions experienced by customers as well as customer connectivity expansion from both electrification connections and off-grid electrification connections. The measured Key Performance Indicators (KPI) further extend to measure customer perceptions based on multiple sub-indicators which inform customer satisfaction. Measurement and monitoring of key financial sustainability indicators focussed on operational profitability, operating cash flow availability to service net interest on borrowings, interest and capital repayments on borrowings as well as the level of customer cash collection from invoiced electricity supplied. Measurement and monitoring of employee work-related fatalities, lost-time incidents and occupational diseases. Measurement and monitoring of key indicators specific to the timely resolution of cases concerning corruption, fraud, and other misconduct as recorded within the Eskom Holdings SOC Limited group Case Management System. The indicators aim to measure and monitor the period between recording an allegation within the case management system and the completion of an initial/preliminary assessment. Additional indicators track and assess whether a formal investigation is initiated promptly when recommended by the initial or preliminary assessment, as well as the degree to which recommendations arising from the formal investigation have been fully implemented. Attain sovereign and 4 Measurement and monitoring of key indicators specific to the milestones to be achieved for the set up and regional energy security operationalising of the Market Operator, including progress towards its operating model design and the submission of the Market Operator License application to NERSA. The measured KPIs further extend to measure transmission infrastructure expansion and strengthening projects. Drive industrialisation 4 Measurement and monitoring of key indicators focussed on Eskom’s contribution to localised production and and lead innovation procurement spend, ongoing execution on the Just Energy Transition strategic implementation plan as well as the development and implementation of “smart technologies” focussed on energy consumption metering as well as the digitalisation of the Eskom procurement management process. Assert SA continental 4 Measurement and monitoring of key indicators focussed on the level of investment in operational and strategic and global energy research and development aimed at improving or sustaining the operations of the business and introducing new leadership technologies. Measurement and monitoring of the initiatives to recover lost generation capacity as well as support the expansion of the current generation capacity with new renewable capacity and storage solutions. We evaluated the reported performance information for the selected key performance areas against the criteria developed from the performance management and reporting framework, as defined in the general notice. When an annual performance report is prepared using these criteria, it provides useful and reliable information and insights to users on the public entity’s planning and delivery on its mandate and objectives. We performed procedures to test whether: • The indicators used for planning and reporting on performance can be linked directly to the public entity’s mandate and the achievement of its planned objectives. • All the indicators relevant for measuring the public entity’s performance against its primary mandated and prioritised functions and planned objectives are included. • The indicators are well defined to ensure that they are easy to understand and can be applied consistently, as well as verifiable so that we can confirm the methods and processes to be used for measuring achievements. • The targets can be linked directly to the achievement of the indicators and are specific, time bound and measurable to ensure that it is easy to understand what should be delivered and by when, the required level of performance as well as how performance will be evaluated. • The indicators and targets reported on in the annual performance report are the same as those committed to in the approved initial or revised planning documents. • The reported performance information is presented in the annual performance report. • There is adequate supporting evidence for the achievements reported. We performed the procedures for the purpose of reporting material findings only; and not to express an assurance opinion or conclusion. 20 Report on the audit of the annual performance report (continued) The material findings on the performance information of the selected key performance areas are as follows: KPA: Achieve universal access, availability, affordability and quality KPI: Customer Delight An achievement of 3.77 was reported against a target of 3.6. Included in the Customer Delight reported value of 3.77 are indices to the value of 2.04 relating to ‘’Key Customer Delight Index; Customer Care and customer queries created via customer walk-ins at the contact centre hubs related to First Contact Resolution, Work Items Completed within KPI and One Contact Resolution”. Adequate processes had not been established to consistently measure and reliably report on these sub-indices. Consequently, the public entity found it difficult to determine the correct achievements to be reported against the planned targets. Furthermore, we could not determine if the reported achievements were correct as adequate systems were not in place to verify the achievements. Consequently, the reported achievement might be more or less than reported and was not reliable for determining if the targets had been achieved. KPI: System average interruption duration index (SAIDI) KPI: System average interruption frequency index (SAIFI) An achievement for SAIDI of 35.09 and for SAIFI of 11.72 was reported against a target of 37.5 and 14.5, respectively. The reported achievements in the annual performance report are inconsistent with the commitments made in the approved planning documents. These discrepancies highlight misalignment between approved plans and operations, while the incorrect reporting is not reflective of actual achievements. Adequate processes had not been established to consistently measure and reliably report on these indicators. Consequently, the public entity found it difficult to determine the correct achievements to be reported against the planned targets. Furthermore, we could not determine if the reported achievements were correct as adequate systems were not in place to verify the achievements. Consequently, the reported achievements might be more or less than reported and were not reliable for determining if the targets had been achieved. Missing indicators In terms of the core strategic focus area on reliability and energy security, Eskom Distribution is responsible for the ongoing maintenance and strengthening of plant assets and the creation of new assets to support the expansion of the current distribution capacity and improve the ratio of electricity supply in relation to electricity demand. However, indicators to measure performance on the progress of Eskom Distribution plant maintenance, strengthening and expansion did not form part of the approved planning documents. Consequently, progress towards the achievement of this mandate was not reported on in the annual performance report and undermines transparency and accountability for delivery on this mandate. Other matters We draw attention to the matters below. Achievement of planned targets The annual performance report includes information on reported achievements against planned targets and provides explanations for under achievements. This information should be considered in the context of the material findings on the reported performance information. Material misstatements corrected We identified preventable material misstatements in the annual performance report submitted for auditing. These material misstatements were in the reported performance information of the Achieve universal access, availability, affordability, and quality key performance area, as well as the Drive industrialisation and lead innovation key performance area. Where management did not subsequently correct the misstatements, we did report material findings in this regard, as reported above. Report on compliance with legislation In accordance with the PAA and the general notice issued in terms thereof, we must audit and report on compliance with applicable legislation relating to financial matters, financial management and other related matters. The accounting authority is responsible for the public entity’s compliance with legislation. We performed procedures to test compliance with selected requirements in key legislation in accordance with the AGSA findings engagement methodology. This engagement is not an assurance engagement. Accordingly, we do not express an assurance opinion or conclusion. Through an established AGSA process, we selected requirements in key legislation for compliance testing that are relevant to the financial and performance management of the public entity, clear to allow consistent measurement and evaluation, while also sufficiently detailed and readily available to report in an understandable manner. The selected legislative requirements are included in the annexure to this auditor’s report. The material findings on compliance with the selected legislative requirements, presented per compliance theme, are as follows: Annual financial statements The financial statements submitted for auditing were not fully prepared in accordance with the prescribed financial reporting framework (IFRS Accounting Standards) as required by section 55(1)(b) of the PFMA. The submitted financial statements contained material misstatements and omissions relating to capital and reserves, financial risk management, accounting classification and fair values, capital management, going concern and impairment disclosures as well as the contingent liabilities, commitments and related party transactions notes. These were subsequently corrected. In addition, the restatement of comparatives was subsequently updated. A similar non-compliance was reported in the prior year. Expenditure management Effective and appropriate steps were not taken to prevent irregular expenditure, as required by section 51(1)(b)(ii) of the PFMA. As reported in the basis for the qualified opinion, the amount of irregular expenditure disclosed in note 52.1 of the separate financial statements does not reflect the full extent of the irregular expenditure incurred. The majority of the irregular expenditure disclosed in the financial statements was caused by non-compliance with section 51(1)(a)(iii) of the PFMA. A similar non-compliance was reported in the prior year. Revenue management Effective steps were not taken to collect all revenue due, as required by section 51(1)(b)(i) of the PFMA. A similar non-compliance was reported in the prior year. Procurement and contract management Some goods, works or services were not procured through a procurement process which is fair, equitable, transparent and competitive, as required by section 51(1)(a)(iii) of the PFMA. A similar non-compliance was reported in the prior year. Consequence management We were unable to obtain sufficient appropriate audit evidence that disciplinary steps were taken against some officials who had incurred irregular expenditure as required by section 51(1)(e)(iii) of the PFMA. This was due to investigations into irregular expenditure not being performed. A similar limitation was reported in the prior year. 21 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Where investigations were performed, disciplinary steps were not taken against some officials who had permitted irregular and fruitless and wasteful expenditure, as required by section 51(1)(e)(iii) of the PFMA. A similar non-compliance was reported in the prior year. Investigations were not conducted into all allegations of financial misconduct committed by officials, as required by Treasury Regulation 33.1.1. A limitation was reported in the prior year. Disciplinary hearings were not held for confirmed cases of financial misconduct committed by some officials, as required by Treasury Regulation 33.1.1. A limitation was reported in the prior year. Other information The accounting authority is responsible for the other information. The other information comprises the information included in the document titled “Eskom annual financial statements 31 March 2026” which includes the directors’ report, the report of the audit committee and statement by the company secretary as required by the Companies Act of South Africa, the document entitled “Eskom Integrated Report” and the document entitled “Governance and Remuneration Report”, which were obtained prior to the date of this report. The other information does not include the consolidated and separate financial statements, our auditor’s report and those selected key performance areas presented in the annual performance report that have been specifically reported on in this auditor’s report. Our opinion on the consolidated and separate financial statements and our reports on the audit of the annual performance report and compliance with legislation do not cover the other information and we do not express an audit opinion or any form of assurance conclusion on it. In connection with our audit, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated and separate financial statements and the selected key performance areas presented in the annual performance report of the directors’ report, or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. The matters included in the Basis for Qualified opinion materially impact the other information and in addition, we describe below that we have concluded that a material misstatement of the other information exists as it relates to the disclosure of irregular expenditure and fruitless and wasteful expenditure. The opening balances of irregular expenditure, fruitless and wasteful expenditure were previously subject to audit qualification, with irregular expenditure qualified due to amounts not being completely and accurately recorded and fruitless and wasteful expenditure being qualified due to it not being fully recorded. In the current year, we continued to identify deficiencies relating to the identification, assessment, investigation, recording and disclosure of irregular expenditure. These matters, when considered together with the current year audit findings and qualifications relating to expenditure and related disclosures, indicate that insufficient progress has been made in addressing the underlying control deficiencies responsible for the recurring findings. A significant concern remains the prolonged period required to investigate and conclude matters before they are formally assessed for disclosure as irregular expenditure or fruitless and wasteful expenditure. At year-end, matters awaiting determination had an average ageing period of approximately 1.69 years. In the current year, the group and company confirmed irregular expenditure amounting to R36 760 million relating to prior years. This has been restated in the Governance and Remuneration Report. As a result of these delays, instances of irregular expenditure may not be identified, assessed and disclosed within the reporting period in which they arise. Instead, once investigations are finalised, the resulting amounts are often recognised as adjustments to prior-year opening balances. This creates a risk that expenditure disclosures reported in the current year do not fully reflect the extent of non-compliance, irregular expenditure and fruitless and wasteful expenditure incurred during the reporting period. Internal control deficiencies We considered internal control relevant to our audit of the consolidated and separate financial statements, annual performance report and compliance with applicable legislation; however, our objective was not to express any form of assurance on it. The matters reported below are limited to the significant internal control deficiencies that resulted in the basis for the qualified opinion, the findings on the annual performance report and the material findings on the compliance with legislation included in this report. Notwithstanding the implementation of the audit recovery plan, there are some significant internal control deficiencies that resulted in negative audit outcomes in the prior and current years that were not adequately addressed. Management did not implement adequate, sufficient, and appropriate internal controls to ensure effective self-assessment of procurement transactions and proper monitoring of awarded contracts for compliance with applicable laws and regulations and timely reporting of identified non -compliances to loss control function. In addition, the loss control function does not have adequate processes in place to ensure that non-compliances are identified to ensure complete reporting. Management have not sufficiently implemented the interventions required to enhance compliance to applicable laws and regulation relating to consequence management, which includes management’s statutory obligation to timely take disciplinary actions from the date they become aware of the transgression. This is demonstrated by repeated instances of non-compliance with relevant legislation reported both in the current and prior years, with audit outcomes remaining unchanged. Management did not implement adequate controls to ensure that disciplinary actions are taken against all transgressors following the concluded investigations. Furthermore, where disciplinary actions are taken, there is inadequate controls to ensure that disciplinary actions are appropriate, consistent, and corrective towards the severity of the transgression committed. Controls over the preparation and review of financial statements were inadequate, resulting in material misstatements in the submitted financial statements. At a divisional and subsidiary level, internal controls were ineffective, and year-end adjustments and reconciliations were not adequately reviewed, leading to material audit adjustments. Revenue collection remains a concern as, although management has implemented appropriate controls and measures to collect outstanding revenue, these efforts have not been effective in recovering all amounts due. As a result, material debtor balances remain outstanding. The continued inability to recover all overdue revenue may adversely affect the entity's long-term financial sustainability. Management did not have adequate controls in place to ensure that, in accordance with the appropriate legislative requirements, the bids of the winning suppliers were received on or before the closing date and time determined for the bid. As a result, we could not confirm whether the majority of the tenders awarded were received on or before the closing date and time advertised to the public for the competitive bids received through the tender office process. We reported a similar control deficiency in the prior years. Management did not exercise adequate oversight over those responsible for ensuring that contracts where standardised rates were mandated have followed the appropriate supply chain management processes. Management did not establish adequate processes and associated controls to consistently measure and reliably report on the customer delight index, the system average interruption duration index, as well as the system average interruption frequency index. In addition, review controls were ineffective and did not detect inaccuracies and errors in the reported results prior to reporting to the Shareholder. The omission of key performance indicators from the shareholders compact is primarily due to misalignment between strategic commitments and formal performance reporting, inadequate oversight and fragmented planning processes further contribute to the exclusion of critical initiatives. 22 Reportable Irregularities In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report that we have identified reportable irregularities in terms of the Auditing Profession Act. We have reported such matters to the IRBA. The matters pertaining to the reportable irregularities have been described in note 53.1 to the consolidated and separate financial statements. Other reports We draw attention to the following engagements conducted by various parties which had, or could have, an impact on the matters reported in the consolidated and separate financial statements, reported performance information, compliance with applicable legislation and other related matters. These reports did not form part of our opinion on the financial statements or our findings on the reported performance information or compliance with legislation. Matters under investigation During the year under review, numerous investigations were undertaken by regulatory authorities, law enforcement agencies, the Accounting Authority, and independent forensic specialists into allegations of fraud, corruption, maladministration, procurement irregularities, revenue-related misconduct, and other instances of unlawful or improper conduct across various areas of the group's operations. These matters are significant due to the nature, scale, and complexity of the alleged schemes, many of which involve sophisticated procurement-related fraud mechanisms, allegations of collusion, manipulation of procurement and contract management processes, irregular capital project expenditure, prepaid revenue irregularities, and matters associated with state capture. Investigations conducted to date have identified instances of control circumvention, governance failures, irregular conduct, and weaknesses within certain business processes that may extend beyond individual transactions or isolated incidents. The breadth and complexity of these matters have resulted in extensive ongoing investigative activities across multiple business units and operating environments. Management has consequently engaged external forensic specialists to assist in identifying, investigating, and quantifying the potential financial and operational impact of these matters. In addition, various Presidential Proclamations have authorised the Special Investigating Unit to investigate allegations of maladministration, unlawful conduct by employees, officials, service providers, as well as the unlawful appropriation, misuse, or expenditure of public funds and assets. These investigations remain ongoing and continue to identify matters requiring further assessment and potential recovery actions. Given the ongoing nature of the investigations, the inherent uncertainty surrounding their eventual outcomes, and the possibility that additional instances of irregular conduct may be identified as investigations progress, management is currently unable to determine the full financial, legal, regulatory, and reputational impact on the group. Consequently, as at the reporting date, it is not possible to reliably quantify the extent of any potential adjustments, recoveries, impairments, provisions, contingent liabilities, or additional disclosures that may ultimately arise from the resolution of these matters. Limited assurance and agreed upon procedures engagements At the date of this report, we have commenced/completed the following engagements: • Agreed upon procedures on the National Treasury pack for the year ended 31 March 2025. The reports were issued to the accounting authority on 24 November 2025. • Agreed upon procedures reports on the group’s generation, transmission and distribution activities regulatory financial report as issued to NERSA. The report relating to generation and distribution activities was issued to the accounting authority on 5 December 2025. The report relating to transmission activities was issued to the accounting authority on 11 December 2025. • Agreed upon procedures on net sent out power megawatt hours, gross sent out power megawatt hours and actual sent out power production figures to NERSA for the year ended 31 December 2025. The report was issued to the accounting authority on 28 April 2026. • Agreed upon procedures on the Home Loan and Mortgage Disclosure Act 63 of 2000, Annual Return Form of Eskom Finance Company SOC Ltd. The report was issued to the accounting authority on 15 April 2026. • Agreed-upon procedures Reports on National Credit Regulator Annual Financial Statement Return (Form 40) for Eskom Finance Company SOC Ltd. The report was issued on 11 March 2026. • Agreed upon procedures for Escap SOC Ltd on the Schedule of Collection and Remission of Premiums to South African Special Risk Insurance Association SOC Limited (SASRIA). The report covered the period from 1 April 2025 to 31 March 2026, and the report was issued to SASRIA on 12 June 2026. • Agreed-upon procedures for Escap SOC Ltd on the regulatory return in compliance with the Insurance Act 18 of 2017 to the Prudential Authority for the year ended 31 March 2026. This report was issued on 31 July 2026. • Agreed upon procedures reports on the short and long term incentives for the year ended 31 March 2026. The reports were issued to the accounting authority on 18 August 2026. • Assurance engagement on the sustainability reporting as included in the 2025/26 Integrated Report. The report will be issued to the accounting authority on the same date as this report. Auditor tenure In terms of the IRBA rule published in Government Gazette number 39475 dated 4 December 2015, we report that Deloitte & Touche has been the auditor of Eskom Holdings SOC Ltd for five years. Deloitte & Touche Registered Auditor Per: André J. Dennis Partner 30 August 2026 5 Magwa Crescent Waterfall City Waterfall 2090 23 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Independent Auditor’s report to Parliament on Eskom Holdings SOC Ltd and its subsidiaries continued Annexure to the auditor’s report The annexure includes the following: • The auditor’s responsibility for the audit; and • The selected legislative requirements for compliance testing. Auditor’s responsibility for the audit Professional judgement and professional scepticism As part of an audit in accordance with the ISAs, we exercise professional judgement and maintain professional scepticism throughout our audit of the consolidated and separate financial statements, and the procedures performed on the reported performance information for selected key performance areas and on the public entity’s compliance with selected requirements in key legislation. Financial statements In addition to our responsibility for the audit of the consolidated and separate financial statements as described in this auditor’s report, we also: • Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the public entity’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made. • Conclude on the appropriateness of the accounting authority’s use of the going concern basis of accounting in the preparation of the consolidated and separate financial statements. We also conclude, based on the audit evidence obtained, whether a material uncertainty exists relating to events or conditions that may cast significant doubt on the ability of the public entity and its subsidiaries to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated and separate financial statements about the material uncertainty or, if such disclosures are inadequate, to modify our opinion on the consolidated and separate financial statements. Our conclusions are based on the information available to us at the date of this auditor’s report. However, future events or conditions may cause a public entity to cease operating as a going concern. • Evaluate the overall presentation, structure, and content of the consolidated and separate financial statements, including the disclosures, and determine whether the consolidated and separate financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the consolidated and separate financial statements. We are responsible for the direction, supervision, and performance of the group audit. We remain solely responsible for our audit opinion. Communication with those charged with governance We communicate with the accounting authority regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the accounting authority with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to have a bearing on our independence and, where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated to those charged with governance, we determine those matters that were of most significance in the audit of the consolidated and separate financial statements of the current period and are therefore key audit matters. We describe these matters in this auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in this auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest of such communication. 24 Compliance with legislation The list of selected legislative requirements are as follows: Selected legislation and regulations Consolidated firm level requirements Public Finance Management Act No. 1 of 1999 Section 50(3); 50(3)(a); 50(3)(b) Section 51(1)(a)(iii); 51(1)(b)(i); 51(1)(b)(ii); 51(1)(e)(iii) Section 52(b) Section 54(2)(c); 54(2)(d) Section 55(1)(a); 55(1)(b); 55(1)(c)(i) Section 56 Section 57(b); 57(d) Section 66(3)(a) Treasury Regulations for departments, trading entities, constitutional Regulation 29.1.1; 29.1.1(a); 29.1.1(c); 29.2.1; 29.2.2; 29.3.1 institutions and public entities Regulation 31.2.5; 31.2.7 Regulation 33.1.1; 33.1.3 Companies Act No. 71 of 2008 Section 30(3)(b)(i); 33(1)(a) Section 45(3)(a)(ii); 45(3)(b)(i); 45(3)(b)(ii); 45(4) Section 46(1)(a); 46(1)(b); 46(1)(c) Section 72(4)(a) Section 75(6) Section 86(1); 86(4) Section 88(2)(d) Section 112(2)(a) Section 129(7) Prevention and Combating of Corrupt Activities Act No. 12 of 2004 Section 34(1) Companies Regulations Regulation 30(2); 43(2)(a) Construction Industry Development Board Act No. 38 of 2000 Section 18(1) Construction Industry Development Board Regulations, 2004 Regulation 17; section 25(7A) Regulation 25(9a) Regulation 25(10) Second amendment National Treasury Instruction No. 5 of 2020/21 Paragraph 1 National Treasury Instruction No. 5 of 2020/21 Paragraph 2; 4.8; 4.9; 5.3 National Treasury Instruction No. 4 of 2015/16 Paragraph 3.4 National Treasury Instruction No. 4 of 2022/23 Paragraph 4.15 National Treasury Instruction No. 3 of 2020/21 Paragraph 4.2; 5.4 National Treasury Instruction No. 11 of 2020/21 Paragraph 3.1; 3.4(b); 3.9 Preferential Procurement Policy Framework Act 5 of 2000 Section 1; 2.1(a); 2.1(f ) 25 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Statements of financial position at 31 March 2026 Group Company Restated 1 Restated1 2026 2025 2026 2025 Note Rm Rm Rm Rm Assets Non-current 773 424 744 546 706 294 712 966 Property, plant and equipment 8 702 852 685 986 610 229 602 758 Intangible assets 9 3 902 3 570 914 890 Future fuel supplies 10 10 333 7 639 10 333 7 639 Investment in equity-accounted investees 11 302 346 95 95 Investment in subsidiaries 12 – – 31 230 27 057 Inventories 13 16 278 15 373 16 278 15 373 Deferred tax 14 21 7 – – Loans receivable 15 10 235 1 583 16 190 31 934 Embedded derivatives 16 1 246 3 847 1 246 3 847 Derivatives held for risk management 17 7 700 13 320 7 700 13 320 Finance lease receivables 18 100 138 70 89 Payments made in advance 19 4 129 1 729 2 033 1 817 Trade and other receivables 20 6 436 4 977 7 046 5 509 Investments 21 9 890 6 031 2 930 2 638 Current 248 432 159 474 250 195 162 559 Inventories 13 37 268 31 084 36 835 30 685 Taxation 33 177 – – Loans receivable 15 1 235 309 2 570 7 467 Embedded derivatives 16 278 125 278 125 Derivatives held for risk management 17 2 064 2 025 2 158 2 075 Finance lease receivables 18 39 36 19 3 Payments made in advance 19 1 236 1 109 1 259 968 Trade and other receivables 20 40 886 41 923 64 004 58 479 Investments 21 40 491 18 925 19 178 – Cash and cash equivalents 22 124 902 63 761 123 894 62 757 Assets held-for-sale 23 – 7 811 – – Total assets 1 021 856 911 831 956 489 875 525 Equity Capital and reserves 360 916 276 339 293 784 225 414 Liabilities Non-current 437 545 478 759 414 076 461 370 Debt securities and borrowings 25 296 294 351 226 296 294 356 204 Derivatives held for risk management 17 3 288 836 3 288 836 Deferred tax 14 11 577 11 389 – – Payments received in advance 26 6 930 6 529 4 913 3 670 Contract liabilities and deferred income 26 35 463 34 041 31 808 32 985 Employee benefit obligations 27 22 533 19 672 20 820 18 237 Provisions 28 55 491 48 197 55 827 48 197 Lease liabilities 29 5 697 6 598 959 993 Trade and other payables 30 272 271 167 248 Current 223 395 156 127 248 629 188 741 Debt securities and borrowings 25 59 901 21 429 72 495 42 470 Loan from shareholder 31 80 076 56 132 80 076 56 132 Derivatives held for risk management 17 1 565 811 1 644 829 Payments received in advance 26 4 219 3 636 3 636 3 404 Contract liabilities and deferred income 26 3 919 3 824 3 602 3 775 Employee benefit obligations 27 9 726 7 584 7 820 6 108 Provisions 28 5 031 6 105 3 516 5 814 Lease liabilities 29 1 173 1 112 131 118 Trade and other payables 30 56 272 55 020 75 419 70 091 Taxation 1 513 474 290 – Liabilities held-for-sale 23 – 606 – – Total liabilities 660 940 635 492 662 705 650 111 Total equity and liabilities 1 021 856 911 831 956 489 875 525 1. Refer to note 49. 26 Income statements for the year ended 31 March 2026 Group Company Restated 1 Restated1 2026 2025 2026 2025 Note Rm Rm Rm Rm Revenue 32 354 724 340 895 335 984 319 666 Other income 33 1 283 3 265 4 008 4 752 Primary energy 34 (151 896) (150 207) (160 109) (171 731) Employee benefit expense 35 (48 060) (43 160) (37 276) (33 420) Impairment of financial assets 36 (281) (7 317) 157 (7 621) Impairment and write down of other assets 36 (836) (299) (841) (294) Other expenses 37 (46 286) (45 165) (54 841) (50 527) Profit before depreciation and amortisation expense as well as net fair value, foreign exchange gain/(loss) and deferred income amortisation (adjusted EBITDA) 108 648 98 012 87 082 60 825 Depreciation and amortisation expense 38 (36 335) (31 764) (33 453) (29 179) Net fair value, foreign exchange gain/(loss) and deferred income amortisation 39 (1 126) (10 415) (1 510) (10 483) Profit before net finance cost and share of profit of equity-accounted investees 71 187 55 833 52 119 21 163 Net finance cost (31 886) (34 072) (34 989) (35 273) Finance income 40 8 447 6 840 9 219 8 159 Finance cost 41 (40 333) (40 912) (44 208) (43 432) Share of profit of equity-accounted investees after tax 11 100 102 – – Profit/(loss) before tax 39 401 21 863 17 130 (14 110) Income tax 42 (9 056) (7 822) (3 037) (213) Profit/(loss) for the year2 30 345 14 041 14 093 (14 323) Statements of comprehensive income/(loss) for the year ended 31 March 2026 Group Company Restated1 Restated1 2026 2025 2026 2025 Note Rm Rm Rm Rm Profit/(loss) for the year 2 30 345 14 041 14 093 (14 323) Other comprehensive loss (1 768) (560) (1 723) (575) Items that may be reclassified subsequently to profit or loss (552) 226 (550) 226 Cash flow hedges Changes in fair value 17 (962) 1 781 (962) 1 781 Net amount transferred to profit or loss Ineffective portion of cash flow hedges 39 303 (1 278) 303 (1 278) Net amount transferred to initial carrying amount of hedged items (94) (193) (94) (193) Foreign currency translation differences on foreign operations (2) – – – Income tax thereon 42 203 (84) 203 (84) Items that may not be reclassified subsequently to profit or loss (1 216) (786) (1 173) (801) Remeasurement of benefits 27 (1 666) (1 077) (1 607) (1 098) Income tax thereon 42 450 291 434 297 Total comprehensive profit/(loss) for the year2 28 577 13 481 12 370 (14 898) 1. Refer to note 49. 2. A nominal amount is attributable to the non-controlling interest in the group. The remainder is attributable to the owner of the company. 27 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Statements of changes in equity for the year ended 31 March 2026 Share Other Cash flow Unrealised Foreign Accumulated Total capital capital hedge fair value currency profit/(loss) equity reserve reserve translation reserve Rm Rm Rm Rm Rm Rm Rm Group Balance at 31 March 2024 241 550 44 000 (868) (10 313) 53 (51 564) 222 858 Profit for the year1 – – – – – 14 041 14 041 Other comprehensive income/(loss), net of tax – – 226 – – (786) (560) Share capital issued 76 000 (44 000) – – – – 32 000 Conversion of loan from shareholder – 8 000 – – – – 8 000 Transfers between reserves – – – 2 627 – (2 627) – Balance at 31 March 2025 317 550 8 000 (642) (7 686) 53 (40 936) 276 339 Profit for the year – – – – – 30 345 30 345 Other comprehensive loss, net of tax – – (550) – (2) (1 216) (1 768) Share capital issued 64 000 (8 000) – – – – 56 000 Transfers between reserves – – – 258 – (258) – Balance at 31 March 2026 381 550 – (1 192) (7 428) 51 (12 065) 360 916 Company Balance at 31 March 2024 241 550 44 000 (868) (10 313) – (74 057) 200 312 Loss for the year1 – – – – – (14 323) (14 323) Other comprehensive income/(loss), net of tax – – 226 – – (801) (575) Share capital issued 76 000 (44 000) – – – – 32 000 Conversion of loan from shareholder – 8 000 – – – – 8 000 Transfers between reserves – – – 2 627 – (2 627) – Balance at 31 March 2025 317 550 8 000 (642) (7 686) – (91 808) 225 414 Profit for the year – – – – – 14 093 14 093 Other comprehensive loss, net of tax – – (550) – – (1 173) (1 723) Share capital issued 64 000 (8 000) – – – – 56 000 Transfers between reserves – – – 258 – (258) – Balance at 31 March 2026 381 550 – (1 192) (7 428) – (79 146) 293 784 Share capital Refer to note 24 for details regarding share capital. Other capital Other capital comprises of the portions of the loan from the shareholder that were approved for conversion to equity by the Minister of Finance prior to the reporting date and where the share certificates were only issued after the reporting date. Cash flow hedge reserve The cash flow hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedging instruments (forward exchange contracts and cross-currency swaps) related to hedged transactions that have not yet occurred. The cross-currency swap hedges foreign exchange rate and interest rate risk of the future interest payments and the principal repayment on bonds and loans (denominated in US dollar, euro and Chinese yuan). Unrealised fair value reserve The cumulative net change in the fair value of financial instruments that have not been designated as cash flow hedging instruments is recognised in profit/(loss). The unrealised portion of the net change in fair value is not distributable and has been reallocated from a distributable reserve (accumulated profit) to a non-distributable reserve. Foreign currency translation reserve The foreign currency translation reserve comprises exchange differences resulting from the translation of the results and financial position of foreign operations. Accumulated profit/(loss) Accumulated profit/(loss) is the amount of cumulative profit/(loss) retained in the business after tax. No dividend has been proposed in the current or prior year. There are no restrictions on the distribution of dividends. Non-controlling interest The group does not have any subsidiaries with a material non-controlling interest. 1. Refer to note 49. 28 Statements of cash flows for the year ended 31 March 2026 Group Company 2026 2025 2026 2025 Note Rm Rm Rm Rm Cash flows from operating activities Cash generated from operations 43 104 413 93 366 78 063 60 604 Net cash from derivatives held for risk management (1 177) (1 436) (959) (1 256) Finance income received 390 441 333 395 Finance cost paid (7) (26) (6) (4) Income taxes paid (7 035) (6 400) (2 110) – 96 584 85 945 75 321 59 739 Cash flows used in investing activities Disposals of property, plant and equipment 647 292 577 304 Disposals of intangible assets 17 – 17 – Acquisitions of property, plant and equipment (48 034) (39 832) (39 510) (33 637) Acquisitions of intangible assets (384) (157) (73) (97) Acquisitions of future fuel supplies (2 959) (3 388) (2 959) (3 388) Acquisitions of investments in subsidiaries – – (4 173) (4 360) Acquisitions of treasury investments (19 324) (1 397) (19 324) (1 397) Disposals of insurance investments 31 124 26 133 – – Acquisitions of insurance investments (36 671) (29 375) – – Payments made in advance (2 346) (18) (358) (18) Cash used in provisions (122) (216) (121) (216) Net cash (used in)/from derivatives held for risk management (4) 35 (4) 35 Loans receivable repaid 2 823 1 759 25 158 3 793 Loans receivable advanced (762) (741) – (500) Cash from finance lease receivables 35 37 2 39 Dividends received 102 72 143 102 Dividends received – investment in equity-accounted investees 11 144 102 – – Finance income received 2 884 2 321 3 357 3 673 (72 830) (44 373) (37 268) (35 667) Cash flows from/(used in) financing activities Debt securities and borrowings raised 44 21 498 8 683 21 496 24 240 Loan from shareholder raised 44 80 000 64 000 80 000 64 000 Payments made in advance 44 (87) (131) (87) (131) Debt securities and borrowings repaid 44 (36 758) (46 424) (52 359) (46 309) Net cash from derivatives held for risk management 44 (667) 4 555 (667) 4 555 Cash used in lease liabilities 44 (1 010) (783) (154) (49) Finance income received 4 556 2 217 4 462 2 211 Finance cost paid (29 963) (33 364) (29 401) (32 676) Taxes paid (38) (60) (38) (58) 37 531 (1 307) 23 252 15 783 Net increase in cash and cash equivalents 61 285 40 265 61 305 39 855 Cash and cash equivalents at beginning of the year 63 761 23 585 62 757 22 965 Foreign currency translation (2) – – – Effect of movements in exchange rates on cash held (168) (63) (168) (63) Assets and liabilities held-for-sale 26 (26) – – Cash and cash equivalents at end of the year 22 124 902 63 761 123 894 62 757 Cash flow allocation Cash flows that form part of the changes in the line items of the statement of financial position are classified into operating, investing and financing activities in a manner that is most appropriate to the group. As a result, the cash flows associated with some line items in the statement of financial position may be split into multiple cash flow activities in the statement of cash flows. These line items are: Derivatives held for risk management Derivatives held for risk management are classified as operating, investing or financing activities based on the allocation of the cash flows of the underlying hedged item. Refer to note 17. Payments made in advance Payments made in advance that relate to the raising of debt securities and borrowings are classified as financing activities. Payments related to the acquisition of property, plant and equipment and intangible assets are allocated to investing activities. All other payments made in advance are deemed operational in nature and are therefore included within operating activities. Refer to note 19. Provisions Cash flows related to provisions for compensation events where the cost of property, plant and equipment includes these costs, are classified as investing activities. All other provisions are operational in nature and are classified as operating activities. Refer to note 28. Finance income and costs Finance income and costs are allocated in line with the allocation of the related balances on which the income or cost arose. The interest income classified as financing activities was earned incidental to the financing activities and has thus been classified as such in the statement of cash flows. 29 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements for the year ended 31 March 2026 1. General information Eskom Holdings SOC Ltd (Eskom), a state-owned company and holding company of the group, is incorporated and domiciled in the Republic of South Africa. The group is wholly owned by the government with the Minister of Electricity and Energy as the shareholder representative. The principal activity of the group is the vertically integrated regulated electricity business (Eskom and National Transmission Company South Africa SOC Ltd (NTCSA)) that generates, transmits and distributes electricity to local industrial, mining, commercial, agricultural, redistributor (metropolitan and other municipalities) and residential customers, and to international customers in southern Africa. The group also purchases electricity from IPPs and international suppliers in southern Africa. The primary business focus of the other subsidiaries is to support the electricity business. The business nature of the significant operating subsidiaries is set out in note 12. 2. Summary of material accounting policies The accounting policies applied in the preparation of these separate and consolidated financial statements are set out below. 2.1 Basis of preparation and measurement Statement of compliance The consolidated financial statements of Eskom Holdings SOC Ltd at and for the year ended 31 March 2026 comprise the Eskom company, its subsidiaries, joint ventures, associates and structured entities (together the group). The separate and consolidated financial statements have been prepared in accordance with IFRS Accounting Standards and in the manner required by the PFMA and the Companies Act. The financial statements have been prepared on the going-concern basis and were approved for issue by the Board on 29 August 2026. Basis of measurement The separate and consolidated financial statements are prepared on the historical-cost basis except for the following items which are measured at fair value: • derivatives held for risk management • embedded derivatives • certain investments (listed shares) Functional and presentation currency The separate and consolidated financial statements are presented in South African rand (rounded to the nearest million unless otherwise stated), which is the company’s functional currency and the presentation currency of the group. Changes in accounting policies The group has consistently applied the accounting policies to all periods presented in these consolidated financial statements except for new or revised standards and interpretations implemented during the year. The nature and effect of new standards and interpretations are discussed in note 51.2. 2.2 Consolidation Subsidiaries Subsidiaries are consolidated from the date on which control is transferred to the group until the date that control ceases. Investments in subsidiaries are accounted for at cost less impairment losses in the separate financial statements of the company. When the group ceases to have control of an entity, it derecognises the assets and liabilities of the subsidiary and any components of equity. Any resulting gain or loss is recognised in profit or loss. The group insures certain risks through a wholly owned captive insurer, Escap SOC Ltd. Insurance transactions between group entities are eliminated on consolidation with the exposures to external insurers and reinsurers recognised in the group. Common control transactions are accounted for at carrying value in the consolidated and separate financial statements. The acquirer recognises the acquired assets and liabilities at the carrying values reflected in the financial statements of the transferring entity. The transferring entity recognises the net carrying value of the assets and liabilities transferred as its investment in the subsidiary and the acquirer recognises the same value as equity in their respective financial statements. Any difference between the consideration transferred and the net carrying value of the assets and liabilities that form part of the common control transaction is recognised in the respective financial statements as part of the investment in the subsidiary by the transferring entity and as equity by the acquirer. The accounting policies of the subsidiaries have been adjusted, where necessary, to ensure consistency with the policies adopted by the group. Investment in equity-accounted investees Investments in equity-accounted investees (associates and joint ventures) are accounted for at cost less impairment losses in the separate financial statements of the company and on the equity method of accounting in the consolidated financial statements. The group’s share of post-acquisition profits or losses of these investments is recognised in profit or loss within share of profit of equity-accounted investees. The cumulative post-acquisition movements, including dividends received, are adjusted against the carrying amount of the investment. The accounting policies of associates and joint ventures have been adjusted where necessary to ensure consistency with the policies adopted by the group. Financial statements of associates or joint ventures prepared as of a different date to that of the group (maximum of three months difference) are adjusted for significant transactions and events that occurred between the date of the financial statements of the associate or joint venture and the date of the financial statements of the group. 30 2.3 Foreign currency translation Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at closing (reporting date) exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when recognised in other comprehensive income for qualifying cash flow hedges. Non-monetary items measured at historical cost are translated at the exchange rate on transaction date. Foreign loans are initially recognised at the exchange rate prevailing at the transaction date and are translated at spot rate at every reporting date. Foreign exchange gains and losses that relate to financial assets and liabilities at amortised cost are presented in profit or loss within net fair value and foreign exchange gain/loss. 2.4 Property, plant and equipment Recognition and measurement Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. Cost includes the initial estimate of environmental rehabilitation costs, borrowing costs and transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency transactions. Assets under construction includes the cost of materials, direct labour and any other directly attributable costs incurred in bringing an item of property, plant and equipment to its present location and condition. Significant parts of an item of property, plant and equipment that have different useful lives are accounted for as separate items (major components). Spare parts classified as strategic and critical spares are recognised as property, plant and equipment and are only capable of operating in the manner intended by management when they are installed. Items of property, plant and equipment transferred from customers are initially recognised at fair value in accordance with IAS 16 Property, Plant and Equipment and any related revenue is recognised in accordance with IFRS 15 Revenue from Contracts with Customers, within revenue. Subsequent costs are capitalised only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. When part of an asset is being replaced, the carrying amount of the replaced part is derecognised. Repairs and maintenance are charged to profit or loss during the financial period incurred. Owned land and spare parts are not depreciated. Depreciation on other owned assets is calculated using the straight-line method to allocate cost over the estimated useful lives (limited to residual values). Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful life of the assets. The useful lives of owned and right-of-use assets are as follows: Owned Right-of-use Years Years Buildings and facilities 5 to 40 3 to 5 Plant • Generating 3 to 80 15 • Transmitting 5 to 50 n/a • Distributing 5 to 90 n/a • Other 10 to 40 18 to 50 Equipment and vehicles 3 to 55 2 to 5 The depreciation method, residual values and useful lives of assets are reviewed and adjusted if appropriate, at each reporting date. The estimation of the useful lives and residual values of property, plant and equipment is an area of judgement. The estimation is based on professional judgement and independent expert opinion, where available, considering historical performance, the circumstances and operating environment in which the assets operate, alignment to industry benchmarks as well as expectations about the future. An item of property, plant and equipment is derecognised on disposal or when no future economic benefits are expected from its use or disposal. Gains or losses on the disposal or write-off of an item of property, plant and equipment are recognised in profit or loss within other income or other expenses. Projects in assets under construction that have been discontinued are written off and included in other expenses. Investigations into possible corruption and related impact on capital projects Eskom acknowledges that there is evidence that its control environment to ensure that capital contracts were awarded appropriately, subsequent changes and amendments were valid and that value was received have not operated effectively and that remediation of such control deficiencies is ongoing. Several contracts and contract amendments have been highlighted by the Zondo Commission, Special Investigations Unit (SIU) and other internal and external mechanisms. Matters that are under investigation include: • contracts being irregularly awarded • non-compliance with contractual terms in submitting claims • modifications to contracts where the value added to Eskom is questionable Eskom is mostly reliant on the SIU who has the requisite knowledge and access to systems and data to evaluate and investigate these complex transactions and the consequential effects thereof. Eskom does not have access to the SIU investigations and related progress as the details are only made available to Eskom once an investigation is finalised. The outcomes of these SIU and other internal investigations are assessed once finalised and, if required, an adjustment is made to the carrying value of the related assets. The investigations are complex and determining the correct accounting implications for these possible irregularities that cover an extended period of time presents a key judgement. A receivable is only raised for a recovery of an overpayment when the realisation of the income is virtually certain and included as other income in profit or loss. Internal investigations into corruption and maladministration are completed from time to time and where wasteful, fruitless and fraudulent expenditure is identified, these are expensed and the carrying value of the related asset reduced. These write-offs will have an impact on the EBITDA at the time of recognition but are non-cash in nature. 31 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.5 Intangible assets Research and development Research expenditure is recognised as an expense as incurred. Development expenditure (relating to the design and testing of new or improved products) is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in profit or loss within other expenses as incurred. Development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses after initial recognition. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Development costs previously capitalised that have been discontinued are written off and included in other expenses. Capitalised development costs are amortised from the point at which the asset is ready for use on a straight-line basis over its useful life. Rights Rights consist mainly of servitudes and rights of way under power lines. A servitude right is granted to the group for an indefinite period (useful life) and is therefore not amortised. Computer software Computer software and licences acquired have a finite useful life and are measured at cost less accumulated amortisation and any accumulated impairment losses. Software that is integral to the functionality of related equipment is capitalised as part of the equipment. Costs associated with the support and maintenance of computer software programmes are recognised as an expense as incurred. Amortisation is calculated using the straight-line method to allocate costs over the estimated useful lives of software of between 3 and 10 years. Amortisation methods and useful lives of assets are reviewed at each reporting date and adjusted if appropriate. 2.6 Impairment of non-financial assets The carrying amount of non-financial assets within the scope of IAS 36 Impairment of Assets are reviewed at each reporting date to determine whether there are any indicators of impairment and whenever events or changes in facts and circumstances indicate that the carrying amount may not be recoverable. Assets that have an indefinite useful life (rights) are tested annually for impairment irrespective of whether there is any indication of impairment. Assets are grouped into the smallest identifiable group of assets, a cash-generating unit (CGU), that generate cash inflows that are largely independent of the cash inflows from other assets or groups to assess impairment. An impairment loss is recognised in profit or loss for the amount by which the asset’s (or CGU’s) carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s (or CGU’s) fair value less costs of disposal and value in use. Non-financial assets that were subject to impairment are reviewed for possible reversal of the impairment at each reporting date. Impairment losses or reversals are recognised in profit or loss within net impairment and write down of other assets where previously recognised impairment losses have decreased or may no longer exist. 2.7 Capitalisation of borrowing costs Borrowing costs attributable to the construction of qualifying assets that take a substantial period to get ready for their intended use are capitalised as part of the cost of these assets over the period of construction until the asset is substantially ready for its intended use. All other borrowing costs are expensed in the period in which they occur. Borrowing costs for qualifying assets financed by specific borrowings are capitalised using the actual interest expense incurred. Borrowing costs for qualifying assets not financed by specific borrowings are capitalised at the weighted average of the borrowing costs (capitalisation rate) using the borrowings applicable to the entity in the group. 2.8 Leases The group assesses at contract inception whether a contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Lessee accounting The group recognises right-of-use assets relating to the right to use the underlying assets and lease liabilities for the lease payments except for short- term leases and leases of low-value assets, where the recognition exemption is applied. Right-of-use assets The group recognises a right-of-use asset at lease commencement (the date the underlying asset is available for use). Right-of-use assets are measured at cost less any accumulated depreciation and impairment losses and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred and lease payments made at or before the commencement date. Refer to note 2.4 for details regarding the depreciation of right-of-use assets and to note 2.6 regarding assessment for impairment of right-of-use assets. 32 Lease liabilities The group recognises a lease liability at the commencement of a lease at the present value of the lease payments that must be made over the lease term. The lease payments include fixed payments and variable payments dependent on an index or rate. The group uses the incremental borrowing rate at lease commencement to calculate the present value of lease payments if the interest rate implicit in the lease is not readily determinable. The incremental borrowing rate requires a degree of judgement regarding the determination of an appropriate discount rate for the lease term and is based on borrowings of a similar term which considers current market conditions. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for lease payments made. The carrying amount of lease liabilities is remeasured to reflect any reassessment, lease modification or a change of the in substance fixed lease payments. Short-term leases and leases of low-value assets The group applies the short-term lease recognition exemption to leases with a term of less than 12 months. The group also applies the lease of low- value assets recognition exemption to leases with a value of less than R75 000. Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term. Lessor accounting Finance leases Finance lease receivables mainly comprise premium power supply equipment contracts. The present value of the lease payments is recognised as a receivable when property, plant and equipment are leased out under a finance lease. The difference between the gross receivable and the present value of the receivable is disclosed as unearned finance income within finance lease receivables. Lease income is recognised over the term of the lease using the net investment method, which reflects a constant periodic rate of return. Finance lease receivables are assessed for impairment and derecognised in accordance with the requirements for financial assets. Operating leases Leases where substantially all of the risks and rewards of ownership are not transferred are classified as operating leases. Payments received under operating leases are recognised in profit or loss within other income on a straight-line basis over the period of the lease. 2.9 Payments made in advance Securing debt raised Payments were made in advance to lenders for the commitment and issuing fees incurred in raising debt. Refer to 2.10.2. Environmental rehabilitation trust fund Contributions were made by Eskom to environmental rehabilitation trust funds that were established to fund the financial obligation in respect of the rehabilitation of certain coal mines from which Eskom sources its coal for the generation of electricity. The trust funds are controlled by third parties and will be used solely for the environmental rehabilitation of the relevant coal mines. The contributions made to the trust funds are recognised separately from the environmental rehabilitation provision in accordance with the requirements of IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds. Changes in the carrying amount of the trust funds are recognised in profit or loss within other income. Other Other payments in advance comprise mainly payments made to suppliers in advance to reserve manufacturing capacity and resources to secure the future delivery of goods and services required for operational and capital activities as well as for support and maintenance services of IT infrastructure. These amounts are recognised in profit or loss or capitalised to property, plant and equipment as the underlying goods and services are received. There are various remedies in place, including performance bonds, early cancellation penalties and guarantees, that can be used to recover outstanding payments in advance in the event of default or non-performance. 2.10 Financial instruments 2.10.1 Financial assets (excluding derivatives) Classification The appropriate classification of a financial asset is determined on acquisition of the financial asset and is based on: • whether the contractual terms of the financial asset gives rise to contractual cash flows that are solely payments of principal and interest • the objective of the business model in which the financial asset is held at a portfolio level that best reflects the way the business is managed Financial assets are not reclassified subsequent to their initial recognition unless the group changes its business model for managing financial assets, in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model. Financial assets are classified into the following categories: Amortised cost A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at fair value through profit or loss: • its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding • it is held within a business model whose objective is to hold assets to collect contractual cash flows Fair value through profit or loss All financial assets not classified as measured at amortised cost or fair value through other comprehensive income are measured at fair value through profit or loss. 33 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.10 Financial instruments (continued) 2.10.1 Financial assets (excluding derivatives) (continued) Measurement Initial recognition Financial assets are initially measured at fair value on the date of commitment to purchase (trade date). The transaction price is generally the best indicator of fair value. If a contract with a customer has a significant financing component, the related financial asset is initially measured at the transaction price excluding the time value of money. Where the fair value of a financial asset is different to the transaction price, a day-one gain or loss may arise. If the fair value has been determined based on market-observable data, the whole day-one gain or loss is recognised immediately in profit or loss. If the fair value has not been based on market-observable data, the day-one gain or loss is deferred in the statement of financial position and amortised over the term of the instrument in profit or loss. Any directly attributable transaction costs are included in the initial measurement of financial assets except for financial assets at fair value through profit or loss where directly attributable transaction costs are recognised in profit or loss. Purchased or originated credit impaired assets are financial assets that are credit impaired on initial recognition. These assets are recognised at fair value reflecting the credit risk at acquisition and are subsequently measured at amortised cost using a credit-adjusted effective interest rate. Purchased or originated credit impaired assets are excluded from the general three-stage expected credit loss model. Lifetime expected credit losses are embedded in the measurement of the asset through the credit-adjusted effective interest rate. Cumulative changes in the lifetime expected credit losses since initial recognition are recognised as a loss allowance or gain in profit or loss. After initial recognition Amortised cost Financial assets at amortised cost are measured at amortised cost after initial recognition using the effective interest rate method less any accumulated impairment losses. Interest income, foreign exchange gains and losses and impairments are recognised in profit or loss. Loss allowances for financial assets measured at amortised cost are deducted from the gross carrying amount of the assets. Fair value through other comprehensive income Financial assets at fair value through other comprehensive income are measured at fair value after initial recognition. Interest income calculated using the effective interest method, foreign exchange gains and losses and impairments are recognised in profit or loss. Other net gains and losses are recognised in other comprehensive income. Fair value through profit or loss Financial assets at fair value through profit or loss are measured at fair value after initial recognition. Changes in the fair value after initial recognition (including any interest or dividend income) are recognised in profit or loss. Impairment Loss allowances are recognised for expected credit losses on financial assets measured at amortised cost or fair value through other comprehensive income. Loss allowances are calculated using the general or simplified approach. The general approach requires impairment to be measured using a 12-month or lifetime expected credit loss. The lifetime expected credit loss method will be used if, after initial recognition, there is a significant increase in the credit risk of a financial asset or if it becomes credit impaired. The simplified approach requires impairment to be measured using a lifetime expected credit loss and is applied to trade and other receivables. The maximum period considered when estimating expected credit losses is the maximum contractual period over which the group is exposed to credit risk. The 12-month expected credit losses are the portion of the expected credit loss resulting from default events that are possible within 12 months after reporting date (or a shorter period if the expected life of the instrument is less than 12 months). Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of the financial instrument. Expected credit losses are probability-weighted estimates of credit losses. Credit losses are measured as the difference between the cash flows due in accordance with the contract and the cash flows expected to be received, discounted at the effective interest rate of the financial asset. All financial assets subject to impairment based on the general approach are monitored to assess whether they have been subject to a significant increase in credit risk after initial recognition. There will be a significant increase in credit risk when: • payments are more than 30 days past due • a significant qualitative event has occurred Where it is assessed that a counterparty’s credit risk has increased significantly from its initial low risk designation, the related asset is moved from stage 1 to stage 2. An assessment is performed at each reporting date to determine whether financial assets subject to impairment are credit impaired. A financial asset is credit impaired when there is observable evidence that one or more events have occurred that has had a detrimental impact on the estimated future cash flows expected to flow from the asset such as: • significant financial difficulty of the borrower, issuer or customer • a breach of contract such as a default (where the counterparty is unlikely to pay its obligations) or being more than 90 days past due • restructuring of a loan or advance on terms that the group would not otherwise consider • it is probable that the borrower or customer will enter bankruptcy or other financial reorganisation • the disappearance of an active market for a security because of financial difficulties Where the counterparty is assessed to be credit impaired, the related asset is disclosed in stage 3. 34 Summary of staging Instrument Criteria used for assessment of expected credit loss measurement 12-month expected Lifetime expected credit loss Purchased or originated credit loss credit impaired Stage 1 Stage 2 Stage 3 Low credit risk Not credit impaired or Credit impaired or default significant increase in credit risk Trade and other Not applicable (simplified Elected to measure loss Financial asset more than Not applicable receivables approach applied and allowances at an amount 90 days past due therefore use lifetime equal to the lifetime expected credit loss) expected credit losses Finance leases, loans Credit risk is assessed as Financial asset more than Financial asset more than Financial asset that is credit receivable (other than low (where the credit risk 30 days past due 90 days past due impaired at initial home loans) and financial rating assigned is recognition guarantees equivalent to the globally understood definition of investment grade) Loans receivable Financial asset is not Financial asset more than Financial asset more than Not applicable (home loans) past due 30 days past due 90 days past due Investments and cash and Credit risk is assessed as Significant increase in There is objective evidence Not applicable cash equivalents low (where the credit risk credit risk since initial that the counterparty is rating assigned is recognition but there is no unlikely to pay its obligations equivalent to the globally objective evidence of loss understood definition of (ie the counterparty is still investment grade) considered likely to pay its obligations) Derecognition Financial assets are derecognised when the right to receive cash flows from the assets has expired or substantially all the risks and rewards of ownership have transferred from the group. Realised gains or losses on derecognition are determined using the last-in-first-out method. Gains and losses, including those accumulated in other comprehensive income, are recognised in profit or loss. The gross carrying amount of a financial asset is written off when the group has no reasonable expectation of recovering a financial asset. Financial assets written off may still be subject to legal action or other enforcement activities undertaken by the group to recover outstanding amounts where appropriate. Any subsequent recovery of amounts previously written off is recognised in profit or loss. When a financial asset is subject to a modification that does not result in derecognition, an assessment is done to determine whether the modified terms of the financial asset are substantially different from the original terms, considering both quantitative and qualitative aspects as follows: • The 10% test for financial liabilities is applied by analogy for the quantitative assessment. A modification is substantial if the present value of the modified contractual cash flows that were discounted at the original effective interest rate differs by 10% or more from the present value of the original contractual cash flows. • The qualitative assessment evaluates whether the changes to the contractual terms are material in nature, such as changes to the interest rate, maturity date, currency or other material contractual provisions. The modification is considered substantial if such changes are determined to be material, even if the 10% test is not met. The financial asset is derecognised if the quantitative or qualitative assessment indicates that the modification is substantial. A new financial asset is recognised at fair value with any resulting difference between the carrying amount of the original financial asset and the fair value of the new financial asset recognised in profit or loss. The carrying amount of the financial asset is recalculated as the present value of the modified cash flows, discounted at the original effective interest rate if the modification is not substantial. Any adjustment is recognised as a modification gain or loss in profit or loss. 2.10.2 Financial liabilities (excluding derivatives) Classification Financial liability balances have been classified as amortised cost. Measurement Initial recognition Financial liabilities are recognised at the date the entity becomes a party to the contractual provisions of the instrument. Where financial liabilities are carried at amortised cost, transaction costs are included in the value of the financial liability. Fees paid on the establishment of loan facilities are recorded as a payment made in advance where it is probable that some or all of the facility will be drawn down. Refer to note 2.9. The fees paid are recognised as transaction costs upon drawdown and then amortised to profit or loss within finance costs from the date of first drawdown to final maturity of each facility. After initial recognition Financial liabilities at amortised cost are measured using the effective interest method. Derecognition Financial liabilities are derecognised when the obligation expires, is discharged or cancelled or there is a substantial modification to the terms of the liability. 35 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.10 Financial instruments (continued) 2.10.3 Derivatives held for risk management Classification and measurement Derivatives held for risk management are not managed on a held-to-collect and/or for sale business model and the default classification and measurement is therefore at fair value through profit or loss unless they meet the criteria for and have been designated as cash flow hedges. Economic hedges Certain derivative instruments do not qualify for cash flow hedge accounting but are used for economic hedging. Changes in the fair value of these derivative instruments (realised and unrealised gains or losses) are recognised in profit or loss within net fair value and foreign exchange gain/loss. Cash flow hedges The relationship between hedging instruments and hedged items as well as risk management objectives and the strategy for undertaking various hedging transactions are documented at the inception of a transaction. The group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. It is expected that the values of the hedging instrument and hedged item will move in opposite directions because of the hedged risks (foreign exchange and interest rate risks). The hedge ratio is based on a hedging instrument with the same notional amount in currency terms as the hedged item or portion thereof designated for hedge accounting. This results in a hedge ratio of 1:1 or 100%. Day-one gains and losses are deferred in the statement of financial position (in derivatives held for risk management) and amortised on a straight-line basis over the term of the hedging instrument to profit or loss. Unamortised day-one gains and losses are written off to profit or loss if the related financial instrument is derecognised (extinguished) before maturity date. Day-one gains and losses on hedging instruments are predominantly a function of the inclusion of credit, liquidity and other risks in the terms of the trading instrument. These risks are not included in the determination of a hypothetical derivative used to measure fair value movements in a hedged item and are therefore excluded from any hedge accounting relationships. The effective realised and unrealised portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in other comprehensive income within the cash flow hedge reserve. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within net fair value and foreign exchange gain/loss. Cumulative gains or losses existing in other comprehensive income where the hedged item is a non-financial asset are included in the initial carrying amount of the asset when the forecast transaction results in the recognition of a non-financial asset. Gains and losses recognised in the cash flow hedge reserve in other comprehensive income will affect profit or loss in the periods during which the relevant non-financial assets are expensed to profit or loss. Cumulative gains or losses existing in other comprehensive income where the hedged item is a financial liability are taken to profit or loss within finance cost or net fair value and foreign exchange gain/loss when the cash flows occur on the hedged financial liability. When a hedging instrument expires, is sold or a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at that time remains in other comprehensive income until the forecast transaction occurs. If a forecast transaction is still expected to occur, the cumulative gains or losses in other comprehensive income are reclassified from equity to profit or loss in the same periods during which the hedged forecast cash flows affect profit or loss. If a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in other comprehensive income is immediately transferred to profit or loss within net fair value and foreign exchange gain/loss. Sources of ineffectiveness include the following: • period mismatches between the hedging instrument and hedged item • the fair value of the hedging instrument at the hedge relationship designation date (if not zero) • the fair value or cash flow of the hedged item and hedging instrument are dependent on different variables 2.10.4 Embedded derivatives Embedded derivatives that are closely related to the host contract are not separated and are effectively accounted for as part of the hybrid instrument. Derivatives that are separated are accounted for on terms that result in a fair value of zero at the date of inception. Option-based derivatives are separated on the terms stated in the contracts and will not necessarily have a fair value equal to zero at the initial recognition of the embedded derivative resulting in day-one gains or losses. These day-one gains or losses are recognised as deferred income and amortised over the period of the agreement to profit or loss. The changes in fair value of embedded derivatives are recognised in profit or loss within net fair value and foreign exchange gain/loss. The impact of the fair value gains or losses is considered in the calculation of current and deferred tax. 2.10.5 Financial guarantees Financial guarantees are contracts that require the group to make specified payments to reimburse the holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance with the terms of a debt instrument. Financial guarantees are initially measured at fair value and subsequently at the loss allowance calculated in accordance with IFRS 9 Financial Instruments. 2.11 Future fuel supplies Coal The capital costs incurred which are associated with the contractual agreements with coal mines for the right to future coal supplies is accounted for as future fuel. The output of the coal mine is controlled through the contractual agreement between Eskom and the mine. Eskom does not have control over the coal resources until the coal has been mined and delivered to the group. The right to future coal supplies from coal mines is measured at cost. Cost includes payments made to coal suppliers for mine establishment and related equipment in terms of cost-plus agreements. The cost also includes the initial estimate of environmental rehabilitation of the mine as well as changes in the estimated timing or amount of outflow of resources or changes in the discount rate. The cost is amortised to coal inventory over the lesser of the life of the agreement or the underlying assets. 36 Nuclear Expenditure incurred to obtain, convert, enrich and fabricate fuel assemblies is stated at cost in future fuel supplies. The fuel assemblies are transferred to inventory when they are received. Costs include the transfer from equity of any gains or losses on qualifying cash flow hedges relating to purchases of raw materials, fabrication and enrichment. 2.12 Inventories Coal, liquid fuel, maintenance spares and consumables Inventories are stated at the lower of cost and net realisable value. Cost is determined on the weighted average basis and includes expenditure incurred in acquiring inventories and other costs in bringing inventory to its present location and condition as well as the cost of ongoing programmes to rehabilitate the impact of cost-plus mines on the environment and other closure costs for active mines that are charged to profit or loss within primary energy as the coal is consumed. Coal inventory is classified as current or non-current based on whether it is expected to be used within 12 months after the reporting date. All coal inventory at Medupi and Matimba power stations is classified as non-current because planned production requirements are expected to be met from the minimum contractual offtake under the respective coal supply agreements. The other power stations coal inventory is classified as non-current up to the Eskom Grid Code minimum coal inventory levels (either 10 or 20 days) and inventory exceeding that level is classified as current. Nuclear fuel Nuclear fuel consists of enriched and fabricated fuel assemblies and fuel in reactors. Nuclear fuel is stated at the lower of cost and net realisable value. Cost is determined on the first-in-first-out basis and includes cost for the management of fuel assemblies that are recognised to profit or loss on a straight-line basis within primary energy over the estimated useful life of the fuel in the reactor (average 46 months). Nuclear fuel is classified as current as it is expected to be realised within the normal operating cycle. 2.13 Loan from shareholder The loan from the shareholder in terms of the debt relief arrangement arises from the Debt Relief Act, 7 of 2023, and is accordingly classified as a statutory liability. The group elected to measure the loan at historic cost in terms of the Conceptual Framework for Financial Reporting. The loan is subsequently measured at amortised cost. Finance costs are recognised in profit or loss within finance costs. The loan is derecognised when the Minister of Finance confirms that the attached conditions were met and approves that the amounts can be converted to equity. Refer to note 3.1.3. 2.14 Income tax Income tax expense is recognised in profit or loss except to the extent that it relates to items recognised in other comprehensive income or equity, in which case it is recognised on that basis. 2.15 Deferred tax Deferred tax is recognised on temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Deferred tax is determined using tax rates (and laws) enacted or substantively enacted at the reporting date and that are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax is also recognised in respect of temporary differences arising on the assets and provisions created in respect of decommissioning and nuclear waste management and closure, pollution control and rehabilitation. Deferred tax is not recognised for: • temporary differences on the initial recognition of assets or liabilities in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss and does not give rise to equal taxable and deductible temporary differences • temporary differences relating to investments in subsidiaries and associates to the extent that the group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. Future taxable profits are determined based on business plans for legal entities in the group and the probable reversal of taxable temporary differences in future. The estimation of future taxable profits is an area of judgement. Deferred tax assets are reviewed at each reporting date and derecognised if it is no longer probable that the related tax benefits will be realised. The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the group expects to recover or settle the carrying amount of its assets and liabilities at the reporting date. The derecognition of the deferred tax assets is reversed when the probability of future taxable profits improves. 2.16 Payments received in advance, contract liabilities and deferred income Customer connections Customer connections arise when customers make a contribution in advance to the group to construct regular distribution and transmission assets or when customers construct and transfer completed assets to the group to connect to the electricity network. Customer connections received in advance are initially recognised as payments received in advance. Customer connections that arise when customers transfer distribution and transmission assets to the group to connect to the electricity network are accounted for when the customer hands over the completed assets and control transfers to the group. Connections for electricity customers that were connected after 1 April 2018 (transition date to IFRS 15) When the connection provides the customer with a material right, the connection is allocated to deferred income (contract liabilities) when the customer is connected to the electricity network. The deferred income is recognised in profit or loss within revenue on a straight-line basis over the estimated customer relationship period as the connection provides the customer with a material right of renewal that extends the revenue recognition period beyond the initial contractual period. When the connection does not provide the electricity customer with a material right, the connection is recognised in full in profit or loss within revenue when the customer is connected to the electricity network. 37 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.16 Payments received in advance, contract liabilities and deferred income (continued) Customer connections (continued) Connections for electricity customers that were connected after 30 June 2009 but before 1 April 2018 Connections were recognised in profit or loss when the customer was connected to the electricity network in terms of IFRIC 18 Transfers of Assets from Customers. Connections for electricity customers that were connected before 30 June 2009 Connections were allocated to deferred income when the customer was connected to the electricity network. The deferred income is recognised in profit or loss within revenue on a straight-line basis over the expected useful lives of the related assets. Refer to note 2.19 for revenue recognition of connections. Grants Government grants for electrification are initially recognised in payments received in advance and allocated to deferred income when the related asset has been connected to the electricity network. The deferred income is recognised in profit or loss within depreciation and amortisation expense on a straight-line basis over the expected useful lives of the related assets. 2.17 Employee benefit obligations Post-employment medical benefits All permanent employees qualify for post-employment medical benefits, except for new employees appointed on or after 1 June 2003 at a managerial level. The entitlement to post-employment medical benefits is conditional on the employee remaining in service up to retirement when the employee qualifies for the full benefit. Retirement includes any early retirement from age 55 up to normal retirement at age 65. The post-employment medical benefits obligation is accounted for as a defined benefit plan in line with IAS 19 Employee Benefits. The post-employment medical benefits plan is unfunded. The cost to the employer in the form of employer contributions is actuarially determined. Provision is made for the estimated cost over the period until the date of early retirement at age 55 when further service by the employee will lead to no material amount of further benefits to the employee. Actuarial gains or losses are recognised in other comprehensive income within remeasurement of benefits. Interest and other expenses related to these benefits are recognised in profit or loss. Pension benefits All permanent employees of the group are members of the Eskom Pension and Provident Fund (EPPF) in terms of its rules and conditions. The EPPF is registered as a defined benefit fund in terms of the requirements of the Pension Funds Act, 24 of 1956. The assets and pension benefits are administered by the EPPF which is a separate legal entity to the group. The board of trustees of the EPPF consists of an equal number of employer (includes appointing of a non-executive chair and an expert) and member (includes managerial, labour and pensioners) representatives. The board of trustees is required by law to act in the best interest of the plan participants in terms of the rules of the fund and the provisions of the Pension Funds Act, 24 of 1956, and are responsible for setting policies including those governing investments and ensuring that there are sufficient assets to meet the plan obligations as they become due. The board of trustees generally targets to have a portfolio mix of a combined 70% in equity and property and 30% in debt instruments. The board of trustees aims to keep fund assets at a level such that no plan deficits (based on actuarial valuations performed) will arise. Eskom, NTCSA, ERI, Escap and the EPPF itself are the employers in the EPPF. The fund is measured as a whole and there is no policy in place for proportionate allocation of net assets to individual entities of the group. The fund is accounted for in terms of IAS 19 as a defined benefit plan although the terms of the fund do not automatically require the employer to make good any deficit should it arise. The contributions to the EPPF comprise 20.8% of pensionable emoluments of which 13.5% is contributed by the employer and 7.3% by members. Contributions are made by each employer in the fund. Pension benefits are provided by the EPPF to all pensioners of the fund in terms of the rules of the fund. The annual pension benefit on retirement is based on a defined formula of 1.085/600 of the final average emoluments over the last year of service multiplied by the pensionable service period in months. The formula does not limit the benefits payable to the assets and contributions made to the fund. However, the rules of the fund state that any deficit on the valuation of the fund will be funded by increases in future contributions (if consented to by the employer) or reductions in member benefits (as agreed by the members). The obligation on Eskom as the employer to contribute towards the deficit is an area of judgement. As the benefit formula does not limit the payments to the assets in existence in the fund at the payment date, management concluded that the actuarial and investment risk fall on Eskom when considering the requirements of IAS 19 and therefore classified the fund as a defined benefit fund. If there is a substantial surplus on the valuation of the fund, future contributions may be decreased or pensioner benefits may be improved as determined and appropriated by the trustees of the fund. The surplus is not controlled by Eskom but by the trustees of the fund in terms of the Pension Fund Act, 24 of 1956, and rules of the EPPF. An asset ceiling is therefore applied in the case of a surplus that limits the net benefit asset to zero. The pension benefits plan is funded. The cost to the employer, in the form of employer contributions, is actuarially determined. Return on plan assets in excess of interest, adjustments to the asset ceiling and actuarial gains or losses on the obligation are recognised in other comprehensive income within remeasurement of benefits. The expense or income recognised in profit or loss includes the current service cost, interest income on plan assets and interest expense on the defined benefit obligation and the irrecoverable surplus (effect of asset ceiling). Occasional and service leave The liability for occasional and service leave is of a long-term nature in terms of IAS 19 as it is not expected to be settled wholly within 12 months after the reporting period but there is no unconditional right to defer settlement for at least 12 months after the reporting period. The full provision is therefore presented as a current liability in the statements of financial position. An actuarial valuation of the occasional and service leave liability is performed at the reporting date. All actuarial gains or losses and past service costs are recognised in profit or loss within employee benefit expense. The present value of the benefit is determined by using government bonds which have maturities similar to the liability. 38 Bonus Short-term bonus Annual, performance and production bonuses are short-term employee benefits which are expensed as the related services are provided. A liability is raised for bonuses as follows: • annual bonus: on a proportionate basis as services are rendered • performance bonus: on the estimated amount payable in terms of the incentive scheme which is based on the performance of the business and employees in the applicable year • production bonus: on the estimated amount payable in terms of the incentive scheme which is based on improved performance in the production environment Long-term bonus A liability and corresponding expense are raised annually over the vesting period based on the estimated amount payable in terms of the rules of the long-term incentive scheme. Refer to note 50. 2.18 Provisions Provisions are recognised when the group has a present legal or constructive obligation because of a past event, when it is probable that an outflow of resources will be required to settle the obligation and when the amount can be reliably estimated. Provisions are not recognised for future operating losses. The valuation of long-term provisions requires a degree of judgement regarding the future cash flows and the timing thereof. Provisions are determined by discounting the expected future cash flows using pre-tax discount rates that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. The initial cost of a provision is capitalised against the cost of the related asset if it meets the requirements for capitalisation. Subsequent changes in the liability for capitalised provisions are added to, or deducted from, the cost of the related asset. Any amount exceeding the cost of the related asset is allocated to profit or loss. The increase in the provision due to the passage of time is recognised as an expense in profit or loss under finance costs. The main categories of provisions include the following: Power station-related environmental restoration – nuclear (plant and spent fuel) and other generating plant The provision includes the estimated decommissioning cost of nuclear and other generating plant. The estimated cost of decommissioning at the end of the productive life of plant is based on engineering and technical estimates and reports from independent experts. Coal, peaking and renewables power station provisions are updated based on independent reviews performed yearly for five power stations on a five year rotational cycle. The nuclear plant provision is updated every second year. The initial cost of the provision is capitalised against property, plant and equipment. A provision is also raised for the management of used fuel assemblies and high radioactive waste (referred to as spent nuclear fuel), which is recognised and measured based on reports from independent experts. The costing and methodologies are revised on a regular basis to ensure alignment with the relevant requirements, including the National Nuclear Regulator of South Africa and the National Radioactive Waste Management Policy. The cost for the fuel assemblies is included in the cost of inventory while the fuel is in the reactor. The cost relating to radioactive waste is charged to profit or loss within primary energy. Mine-related closure, pollution control and rehabilitation The provision includes the estimated cost of physical, biophysical and social closure and environmental rehabilitation of the mines where a legal or constructive obligation exists. The provision is independently reviewed annually. The initial cost of the provision is capitalised against future fuel. The cost of ongoing closure and rehabilitation programmes for active mines is charged to inventory and subsequently to profit or loss within primary energy as the coal is consumed, while the cost relating to defunct mines is charged directly to profit or loss. Compensation events Compensation events and claims are a normal part of construction agreements and are triggered by changes in scope of work or time needed to complete the work. A dispute resolution process, as outlined in the contractual agreements, is followed as and when a compensation event or claim arises and is dealt with through a structured process involving notification, consultation, assessment and agreement or adjudication. All open compensation events and claims are assessed at the reporting date by management’s experts and legal advisors (where deemed necessary) based on the latest available information to determine the probability of an outflow of resources and the best estimate of the expenditure that would be required to settle the present obligation. There is significant judgement applied by management based on past experience regarding the finalisation and outcome of compensation events, in determining the appropriate provision for these matters. The related costs are charged to profit or loss within other expenses or assets under construction if it meets the requirements for capitalisation. Other Other provisions include provisions made for contractual obligations relating to onerous contracts, litigation matters, including public liability claims, and guarantees. These provisions are measured based on the best estimate of the expenditure that would be required to settle the present obligation at the end of the reporting period and are charged to profit or loss within other expenses. The amount of the provisions is based on management’s assessment of the most likely amounts due based on the current information available. The finalisation of an obligation depends on factors outside the control of the group, for example, legal, arbitration and dispute resolution processes, which could impact the timing. It is not expected that any additional liability in excess of the amounts provided would have a material adverse effect on the group’s financial position, liquidity or cash flow. 39 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 2. Summary of material accounting policies (continued) 2.19 Revenue from contracts with customers The main revenue activity of the group is the sale of electricity to users, which is recognised when electricity is consumed, with supporting inter- segment transactions between the generation, transmission (NTCSA) and distribution segments. The operations of the other subsidiaries in the group (such as employee home loan financing, insurance, maintenance and construction services) support the group activities but are not part of the core electricity revenue chain and are therefore excluded from the group’s principal revenue stream. The sale and purchase of electricity between the generation, transmission and distribution segments are based on contractual agreements which enable the recognition of inter-segment energy related revenue and recoveries (achieved through transfer pricing) for the flow of electricity from generator to consumer. Inter-segment revenues and recoveries are eliminated in the consolidated financial statements and reflected in the inter- segment revenue/recoveries column of the segment report. Refer to note 7 for further information on services and related charges between segments for the sale and purchase of electricity. Revenue is recognised when a customer obtains control of the goods or services supplied. The amount of revenue recognised is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Customers that fail the collectability criterion are accounted for on a cash basis and revenue is only recognised when cash is received. The transaction price is then recognised in profit or loss within revenue and the related payment for VAT is allocated against the trade and other receivables balance. Refer to note 4.6. An invoice is still raised for sales to customers accounted for on a cash basis. The group has a statutory obligation to charge VAT for local customers, payable to SARS, when an invoice is created which gives rise to a receivable that is accounted for as a statutory receivable within other receivables. A portion of the VAT on revenue recognised on a cash basis (for municipalities recorded on a cash basis) are not expected to be realised within 12 months after the reporting period because of the low payment levels of the municipalities which are accounted for on the cash basis and are therefore classified as non-current. An impairment is raised based on the discounted cash flows at a market related interest rate. The expected recovery period is based on current information and past experience limited to a maximum recovery period of five years to provide for a recovery from SARS through a write-off. The group’s principal revenue-generating activities are as follows: Revenue activity Nature and timing of satisfaction of performance Revenue recognition obligation, including significant payment terms Electricity sales Performance obligation is settled when electricity is Revenue is recognised over time as electricity is consumed by the customer supplied to the customer. Most customers pay for (ie when control is transferred). Conventional customers are billed on a electricity after consumption and have terms monthly basis after electricity is consumed whereas prepaid customers pay ranging between 15 and 45 days. Some customers for electricity upfront when electricity tokens are purchased resulting in a prepay for electricity. contract liability to deliver electricity in the future. Prepaid revenue is recognised and the contract liability derecognised for electricity consumed on tokens loaded on the prepaid meter. Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties. Connections Connections arise when customers make a Connections that were completed before 30 June 2009 were allocated to contribution to the group to construct regular deferred income when the customer was connected to the electricity distribution and transmission assets or when the network. The deferred income is recognised in profit or loss within revenue constructed assets are transferred to the group to on a straight-line basis over the expected useful life of the related assets. connect customers to the electricity network. Connections that were completed after 30 June 2009 were recognised as Connections arise from contracts with customers revenue when the customer was connected to the electricity network in who will also become electricity purchasing terms of IFRIC 18. customers once they are connected and those who Connections that were completed from 1 April 2018 are recognised as follows: will not purchase electricity (eg proper ty developers). • connections relating to electricity purchasing customers where there is a material right are allocated to deferred income when the customer is connected to the electricity network. The deferred income is recognised in profit or loss within revenue on a straight-line basis over the estimated customer relationship period of 25 years. Refer to note 26 for the contract liabilities of connections recognised on a straight-line basis • connections relating to electricity purchasing customers where there is not a material right are recognised as revenue over the initial contract term • connections relating to non-electricity purchasing customers are recognised as revenue at a point in time when the customer is connected to the electricity network Other Ad hoc requests for electricity-related services that Revenue is recognised at a point in time when the service is completed. are distinct from the sale of electricity or the connection of customers to the grid. The assessment to defer revenue for connection charges from electricity customers requires judgement because of divergent international treatments based on contract and operational differences. Changes to the recognition of customer connections are not expected based on the current information available. The assessment of whether a connection charge is a material right or not in terms of IFRS 15 requires judgement of what constitutes a material right from the perspective of the customer and results in different accounting treatments as discussed above. 40 2.20 Finance income Finance income comprises interest receivable on loans, trade receivables, finance lease receivables, cash and cash equivalents and income from financial market investments. Finance income is calculated by applying the effective interest rate method to the gross carrying amount of non-credit impaired financial assets (ie at the amortised cost of the financial asset before adjusting for any expected credit loss allowance). Finance income on credit impaired financial assets is calculated by applying the effective interest rate to the amortised cost of the credit impaired financial assets (ie the gross carrying amount less the allowance for expected credit losses). Interest income is recognised in profit or loss. 2.21 Finance cost Finance cost comprises interest and fees payable on debt securities and borrowings, guarantee fees payable when financial covenant thresholds are exceeded, loan from shareholder, lease liabilities, interest resulting from derivatives held for risk management and the unwinding of discount on liabilities. Borrowing costs which are not capitalised are recognised in profit or loss. Refer to note 2.7. 2.22 Assets and liabilities held-for-sale Assets and liabilities (or disposal groups) which meet the definition of held-for-sale under IFRS 5 Non-current Assets Held-for-Sale and Discontinued Operations are stated at the lower of their carrying amount or fair value less costs to sell if their carrying amount will be recovered principally through a sale transaction. Assets not in the measurement scope of IFRS 5 are measured at the applicable IFRS Accounting Standards before classification as held-for-sale. 2.23 Net debt Gross debt is the aggregate of debt securities and borrowings, loan from shareholder and lease liabilities. Net debt is calculated by adjusting gross debt for related payments made in advance, derivatives held for risk management and cash and cash equivalents. 3. Capital management, going concern and impairment 3.1 Capital management The objective of capital management is to ensure that the group is sustainable over the long term. The government, as the sole shareholder, and the Board have the responsibility to ensure that the group is adequately capitalised and that the business is attractive to investors and lenders. Group funding consists of external debt and equity investments by the shareholder (including those under the Debt Relief Act and Debt Relief Amendment Act), funds generated from operations and funds borrowed on local and foreign debt markets (limited to borrowings approved by the Minister of Finance during the debt relief period and drawdowns on existing facilities). The following capital reserves are managed by the group: Group Company Restated Restated 2026 2025 2026 2025 Note Rm Rm Rm Rm Share capital 24 381 550 317 550 381 550 317 550 Other capital – 8 000 – 8 000 Accumulated loss (12 065) (40 936) (79 146) (91 808) Net debt 44 313 312 358 652 321 134 379 076 682 797 643 266 623 538 612 818 Facilities available – debt securities and borrowings1 12 325 14 116 12 325 14 116 3.1.1 Share capital Share capital consists of issued shares amounting to R381 550 million (2025: R317 550 million). 3.1.2 Accumulated loss Revenue The group analyses the Integrated Resource Plan (which forecasts the growth in long-term electricity demand) and evaluates the alternative options to meet and manage forecast demand. This information impacts the planning process and informs the revenue applications made to NERSA for tariff increases that will allow the group to be financially sustainable. Operating cost The group continues to pursue cost-saving opportunities to assist with ensuring financial sustainability. The following non-generally accepted accounting principles profit or loss measures (unaudited) are monitored by management: Group Company Restated Restated 2026 2025 2026 2025 % % % % EBITDA margin 30.63 28.75 25.92 19.03 Net profit/(loss) margin 8.55 4.12 4.19 (4.48) 3.1.3 Net debt Group Company 2026 2025 2026 2025 Rm Rm Rm Rm Funding used 134 995 121 944 114 566 112 441 Debt repayment and net finance costs 62 165 77 571 77 298 76 774 Investment funding requirements 72 830 44 373 37 268 35 667 Funding raised 134 995 121 944 114 566 112 441 Cash from operations 96 584 85 945 75 321 59 739 Financing activities 99 696 76 264 100 550 92 557 Unused cash (61 285) (40 265) (61 305) (39 855) 1. Facilities in foreign currency (refer to note 5.3.2) are converted to rand at mid-spot rate (refer to note 5.2.1) at reporting date. 41 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 3. Capital management, going concern and impairment (continued) 3.1 Capital management (continued) 3.1.3 Net debt (continued) The following ratios (unaudited) play an important role in the credit ratings given to the group, which in turn influences the cost of funding. The credit rating of the group is affected by its own financial position as well as the credit rating of the sovereign: Group Company Restated Restated Unit 2026 2025 2026 2025 Net debt: equity ratio 0.87 1.30 1.09 1.68 Net debt: EBITDA ratio 2.88 3.66 3.69 6.23 Net debt service cover ratio 1.55 1.11 0.97 0.78 Free funds from operations: net debt % 37.98 29.58 30.72 19.10 Eskom’s credit ratings at 31 March were as follows: Rating Outlook 2026 2025 2026 2025 Standard & Poor’s Foreign currency B+ B Stable Credit watch positive Local currency B+ B Stable Credit watch positive Moody’s Foreign currency B2 B2 Stable Positive Local currency Baa3 Baa3 Stable Positive Fitch ratings Local currency B B Stable Stable Net debt is sourced globally (limited to borrowings approved by the Minister of Finance during the debt relief period) to ensure the lowest cost of funding. Net debt is managed through the continuous monitoring of existing and potential debt funding arrangements to achieve the most favourable terms possible. These terms and costs are heavily dependent on the group’s credit rating. Credit rating agencies recognised the improved operational performance and improved liquidity, supported by the government debt relief, with higher ratings and a more stable outlook. Funds received and not yet spent are invested to provide the maximum possible return while ensuring minimal capital risk and matching the maturity term requirements of the spending of the amount. Refer to note 44 for a reconciliation of the movements and analysis of the composition of net debt. Debt relief arrangement The Eskom Debt Relief Act, 7 of 2023, provided debt relief of R254 billion to Eskom over three years, subject to conditions to allow for the conversion of the debt relief to equity, consisting of liquidity support of R184 billion (R78 billion in 2024, R66 billion in 2025 and R40 billion in 2026) together with the takeover of R70 billion in Eskom debt (principal and interest) in 2026 to support Eskom’s debt and interest payments as they fall due. The Eskom Debt Relief Amendment Act, 5 of 2025, amended the original debt relief arrangement by replacing the initial planned takeover of R70 billion in Eskom debt in 2026 with loans convertible to equity (subject to conditions being met) of R40 billion and R10 billion in 2026 and 2029 respectively. The total amended debt relief in 2026 of R80 billion comprises of the R40 billion liquidity support originally allocated for 2026 and the amended additional R40 billion debt relief support. It also provided for the payment of interest on amounts advanced as a loan at a rate determined by the Minister of Finance from the first disbursement received in 2025 and power to the Minister of Finance to reduce the support for the requirements of Eskom (limited to five percent of the total amount allocated for the applicable financial year) in the event of non-compliance with the conditions. The debt relief support was permanently reduced by R2 billion in both 2024 and 2025 to R76 billion and R64 billion respectively due to the delay in the sale of EFC. The total debt relief support was therefore reduced to R230 billion because of the amendment and the permanent reductions. Renegotiation of the terms after 31 March 2026 are in the process of being finalised with National Treasury and the Minister of Finance. The conditions that were applicable from 1 August 2023 to 31 March 2026 (as confirmed in terms of section 2(2)b of the Act and which can be amended by the Minister of Finance from time to time) were as follows: • The debt relief may only be used to settle debt and interest payments. • Capital expenditure may only be incurred for transmission and distribution as well as generation relating to minimum emission standards, flue-gas desulphurisation, outages and maintenance of existing plant and a greenfield generation project with the written approval from the Minister of Finance. • All net cash proceeds from the sale of non-core assets, including EFC and any property sales may only be used to settle debt and interest payments. • Eskom may only borrow new facilities with the written approval of the Minister of Finance. • The Eskom Guarantee Framework Agreement for the R350 billion facility (which expired on 31 March 2023) must, subject to the terms of that agreement, be reduced as the relevant redemptions fall due. • Positive equity balances in Eskom’s derivative contracts may not be used to structure new debt or loan agreements or be used as margin financing for another derivative contract or derivative overlays, without the written approval of the Minister of Finance. • Eskom must continue to prioritise and expedite the implementation of the legal separation process, including for example, obtaining the required lender consent. • Eskom may not implement remuneration adjustments that negatively affect its overall financial position and sustainability. • Any transaction undertaken in terms of section 54 of the PFMA must be subject to joint approval by the Eskom shareholder representative and the Minister of Finance. The loan is settled in Eskom ordinary shares upon confirmation of compliance with the conditions and obtaining written approval from the Minister of Finance in terms of the Debt Relief Act, 7 of 2023, for conversion to equity. All loan amounts assessed by the Minister of Finance in terms of the conditions qualified for conversion to equity. There were therefore no unconverted loan amounts that failed to qualify for the conversion of debt to equity due to non-compliance with the conditions which would have become due and payable after the debt relief period (from 1 April 2026) under a separate loan agreement. 42 3.2 Going concern The Board assessed the ability of the group to continue as a going concern in the foreseeable future. The Board: • Reviewed the performance of the group for the period ended 31 March 2026, including: – Increase in net profit after tax of R30 345 million and the net current assets of R25 037 million. – Improvement in financial indicators, in particular EBITDA and EBITDA margin. – Increase in the cash and cash equivalents balance to R124 902 million from R63 761 million at 31 March 2025, mainly due to the debt relief support received and improved cash from operations during the year. • Considered the impact of the cash flow forecast for the 24 months ending 31 March 2028 and the projected net profit before tax for the financial year 2027 estimated at R20 417 million (unaudited – information has not been reviewed or reported on by the external auditors). • Considered the government debt relief support and related funding, including: – R80 billion received from government in March 2026 to address Eskom’s debt and interest payments as they fall due, enabling Eskom to better manage its liquidity position. The Minister of Finance approved the conversion of R80 billion to equity on 9 August 2026. – The remaining R10 billion of the debt relief arrangement from government is expected in 2029. Renegotiation of the terms and conditions after 31 March 2026 are in the process of being finalised with National Treasury and the Minister of Finance. – Interest of R896 million (March 2025: R382 million) was paid in 2026 on the debt relief support received. – Operational and relevant capital expenditure is financed through operational cash flows and drawdowns from existing project-related loan agreements. – Government guarantees of R329 billion (initially R350 billion) on borrowings issued before 31 March 2023 remain in place until the guaranteed debt is settled. • Approval was obtained from the Minister of Finance to defer payment of guarantee fees of R980 million for 2025 and R984 million for 2026 to the National Revenue Fund, in terms of the amended Guarantee Framework Agreement, until March 2027. • Considered the affordability and prioritisation of the capital programme and the ability of the group to access funding through existing project- related facilities and future funding sources where required. • Considered the current economic and regulatory environment, including improved credit outlooks from some rating agencies and the tariff and revenue impacts of recent regulatory decisions. • Noted that longer-term liquidity after the debt relief period remains at risk because of financial sustainability challenges, including an inadequate tariff path and structure, reduced sales volumes, high debt service costs, escalating municipal arrear debt, operational inefficiencies, above-inflation cost increases, and the impact of crime, fraud and corruption, including revenue losses from illegal electricity connections and illicit prepaid electricity tokens. • Considered the impact of customer and market developments on revenue and cash flows, including: – Negotiated pricing arrangements with certain energy-intensive customers, including the related NERSA approval for a 62c/kWh tariff with expected increase in electricity consumption. – Mozal aluminium smelter moving into care and maintenance in March 2026, with a resulting reduction in expected electricity demand and forecast revenue. – NERSA decisions providing for the recovery of R40.2 billion in respect of RCA matters for 2015 to 2021 and R54.7 billion in relation to Eskom’s court review application on the MYPD 6 revenue determination for 2026 to 2028. The R54.7 billion will be recovered with R12 billion in 2027, R23 billion in 2028 and R19.7 billion beyond the MYPD 6 period. • Considered the impact of overdue electricity receivables, mainly due to growing municipal arrear debt, and the limited success of the municipal debt relief arrangement. This remains a material risk and places significant strain on the going-concern assessment. Municipal debt of R3.6 billion was written off during the year and an additional R4.0 billion will be written off in 2027 on instruction by National Treasury as part of the municipal debt relief arrangement. The municipal arrear debt is a key matter that should be resolved before the legal separation of the distribution business as it impacts the liquidity and solvency as well as the financial sustainability of the business. • Considered the impact of continued improved generating plant performance as well as the ongoing positive and incremental impact of the Generation Recovery Plan, even though certain challenges remain. Eskom continues to operate a significantly aged generation fleet and plant performance therefore remains a key risk to manage. Failure to mitigate this risk could negatively impact cash flow through lost revenue and increased costs. The generation capacity of the group remains a critical focus area to ensure that appropriate steps are being taken to manage performance. • Considered the impact of volatility in brent crude oil prices arising from the US–Iran military conflict on primary energy costs, including increased coal transport and vehicle fleet costs as well as higher prices for oil-linked fuels. • Considered the impact of environmental compliance and decommissioning obligations on future funding and cash flows, including: – The risk that delays in completion of the flue-gas desulphurisation plant at Medupi by June 2027 could require the settlement or prepayment of certain related funding arrangements before their original maturity dates. Eskom continues to engage with the relevant lender regarding an extension of the existing waiver as discussed under loan covenants in note 5.3.2. – Ongoing funds of R3 billion (including interest) set aside for future nuclear decommissioning activities as directed by the National Nuclear Regulator while discussions on a permanent solution continue. – An additional R21.3 billion has been earmarked for decommissioning activities and clean energy projects, comprising R4.3 billion for nuclear decommissioning, R7.2 billion for coal decommissioning and R9.8 billion for clean energy initiatives. Ongoing engagement with Department of Electricity and Energy and Department of Forestry, Fisheries and the Environment on emissions-related regulatory decisions and the development of detailed decommissioning and shutdown plans for certain power stations in response to Minimum Emission Standards requirements. • Acknowledged that the going-concern assessment depends on several critical factors, including an acceptable price increase, the impact of separate licenced electricity revenue determinations, the application of the pricing methodology, continued improvement in plant performance and the collection of overdue amounts from municipalities. • Considered the timing and dependency risks associated with legal separation, electricity market reform and the corporatisation or operationalisation of sector entities, including the establishment of an independent transmission system operator and the deferred corporatisation of NEDCSA. • Considered the endorsement by the President of the Phase I Report of the ERTT relating to the establishment of an independent state-owned transmission system operator and the broader electricity market reform programme. The report recognises the importance of protecting the financial sustainability of Eskom and addressing lender requirements, financing arrangements and contractual obligations during implementation. It also identifies municipal debt as a strategic priority and proposes a dedicated workstream to develop sustainable solutions to this challenge. The successful implementation of the reform programme is dependent on continued availability of funding and the ability of Eskom and NTCSA to access funding on acceptable terms. The timing, structure and implementation of the reform process, including decisions affecting the governance, financing and operational framework of NTCSA, the transmission assets and certain transmission-related functions are critical factors towards the end of the going-concern assessment. These include addressing contractual arrangements, lender protections and consent requirements, funding structures and approvals, future borrowing requirements, revenue allocation arrangements, government support mechanisms, the allocation of responsibilities across the electricity value chain, as well as accounting and tax considerations. These matters remain subject to Phase II workstreams, policy development, legislative and regulatory processes, stakeholder engagement and applicable approvals, with the Phase II workstreams expected to develop detailed proposals to support the long-term financial sustainability of Eskom and the independent transmission system operator. • Recognised that the group continues to face stakeholder and governance risks arising from historical mismanagement and corruption, and that management continues to focus on strengthening controls, processes, ethics and compliance. 43 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 3. Capital management, going concern and impairment (continued) 3.2 Going concern (continued) The challenges that the group is facing are being addressed by the following mitigation strategies and actions: • Continuous engagement with the shareholder and National Treasury regarding the long-term financial sustainability of the group, including debt relief, tariff design, operational efficiencies, municipal receivables and the implementation of electricity market reforms. • Ongoing implementation of strategies to recover overdue electricity receivables, which include pursuing distribution agency agreements with defaulting municipalities, and to monitor compliance with the municipal debt relief programme. • Advancement of market and regulatory reforms under the Electricity Regulation Amendment Act, 38 of 2024, including the market operator licence awarded to NTCSA on 27 November 2025, ongoing development of the market code, rules and trading platform and participation in the ERTT Phase II workstreams. • Cost and capital programme optimisation to improve liquidity and financial sustainability, while ensuring compliance with conditions attached to debt relief and significant capital projects. • Transformation of business models across generation and distribution in response to competition and policy reform, with a focus on operational efficiency, new services and improved cost-effectiveness. • Ongoing management of regulatory matters, including outstanding RCA decisions and applications, where timing and quantum of recovery remain uncertain and directly affect forecast revenue and cash flows. The Board considered that there are uncertainties and dependencies that exist both from the perspective of timing of interventions as well as whether the plans will materialise as anticipated. The events, conditions and assumptions described above, including tariff outcomes, municipal debt collection, sales volumes, generating plant performance, environmental compliance obligations, electricity market reform initiatives and future funding availability, inherently include material uncertainties that may cast significant doubt on the ability of the group and company to continue as a going concern. The Board has a reasonable expectation that the risks will be satisfactorily addressed with the mitigation strategies in place. The Board continues to manage these strategies as a priority as it is important that they materialise as envisaged. The Board assessed the current cash flow projections and carefully considered the progress of the initiatives referred to in this note and the remaining financial support from government through the debt relief arrangement. The Board concluded that there is a reasonable expectation that the group have access to adequate resources and facilities to be able to continue its operations and fund the capital programme for the foreseeable future as a going concern. The consolidated and separate financial statements have therefore been prepared on a going-concern basis. 3.3 Impairment assessment of the Eskom CGU The Eskom CGU was assessed for impairment because of ongoing liquidity, financial and operational performance challenges, despite some recent improvement. The assessment includes property, plant and equipment as well as assets with indefinite useful lives (rights). 3.3.1 Eskom CGU The identification of CGUs involves significant judgement. Assets are grouped into the smallest identifiable group of assets, a CGU, that generate cash inflows that are largely independent of the cash inflows from other assets or groups to assess impairment. The following factors were considered, among other, in determining the Eskom CGU: • extent to which the generation, transmission and distribution operations generate independent cash inflows • existence of an active market for the outputs of those operations • impact of the current regulatory environment on pricing and revenue generation • extent of operational interdependence between the licenced operations • developments in the South African electricity market and industry restructuring initiatives Independent cash inflows The core operations of the group (generation (Eskom), transmission (NTCSA) and distribution (Eskom) segments) together with the activities of ERI (included in all other segments) continue to function as an integrated electricity value chain. Electricity generated by Eskom is transmitted through the transmission network and ultimately distributed and sold to end customers through the distribution network. Some limited capacity in the grid is sold by NTCSA to international customers in southern Africa. These operations are operationally dependent on one another and collectively generate revenue from the sale of electricity to external customers. NERSA approves the allowed revenue allocation for each licensed activity. It then approves an annual electricity price (tariff ) at a group level that translates into a percentage increase and culminates into a single c/kWh exit price for electricity (electricity tariff ) charged to the end customer. Revenue within the licensed operations (generation, NTCSA and distribution) is determined through regulated pricing and revenue methodologies (contractual agreements between licensed segments through internal transfer pricing mechanisms determined with reference to NERSA methodology principles and the objectives of the South African Grid Code and Transmission Tariff Code). Although there are separate licences for the generation, transmission and distribution activities, the licenced operations do not currently generate cash inflows that are largely independent of one another. The cash inflows of transmission and generation remain dependent on electricity ultimately sold to external customers through the integrated electricity business at a single exit price (electricity tariff ) as approved by NERSA. ERI continues to provide specialised maintenance, engineering and support services, primarily to the group’s core electricity operations, that remain substantially dependent on, and integrated with, the generation, transmission and distribution operations. Assessment of an active market Management assessed whether an active market exists for the outputs of the individual licenced operations. While significant reforms of the South African electricity sector are underway, including the establishment of an independent, licensed electricity market operator and a competitive wholesale electricity market with market rules and broader market participation frameworks, electricity pricing remains substantially regulated at the reporting date. The development of an operational electricity market remains subject to regulatory approvals, implementation of market codes and rules, market operator arrangements, trading platforms and related governance processes. The transmission network also continues to represent the primary infrastructure through which electricity is transported within South Africa and substantial alternative transmission infrastructure and market-based trading arrangements have not yet developed. Management therefore concluded that an active market, as contemplated by IAS 36, does not currently exist for the outputs of the individual licenced operations. 44 Conclusion Management concluded, based on the assessment of independent cash inflows and the absence of an active market for the outputs of the individual operations, that the generation, transmission, distribution and ERI segments continue to represent a single CGU (the Eskom CGU) at 31 March 2026 (applicable to the Eskom group and company). This conclusion is consistent with the assessment performed in the prior reporting period. The operations continue to function within a regulated and operationally integrated electricity business and the underlying factors considered in determining the CGU have not changed sufficiently to support the identification of separate CGUs at reporting date. Future developments and uncertainty The South African electricity industry continues to undergo structural transformation. Developments underway include the further unbundling of electricity industry participants (independent market operator and legal separation of generation and distribution), establishment of future transmission system and market operation arrangements, increased participation by independent market participants and the development of additional generation and transmission infrastructure outside of the Eskom group. The ERTT was established by the President to oversee the restructuring process and develop proposals for the establishment of an independent, state-owned transmission system operator. The ERTT Phase I Report (31 July 2026) sets out a high-level proposal for establishing the transmission system operator and supports a phased implementation approach. The report emphasises that implementation should occur in a manner that addresses lender consent and requirements, financing arrangements and contractual obligations, while ensuring that Eskom is not placed in a worse financial position and that shareholder rights and interests are appropriately considered. Phase II of the process will focus on developing a detailed implementation plan and addressing financial sustainability, municipal debt and obligations to lenders. Management considered these developments as part of the CGU assessment. Although the Phase I Report provides greater clarity regarding the proposed future structure of the electricity sector, the implementation pathway, timing and ultimate outcome of the initiatives remain uncertain at the reporting date and are subject to further stakeholder engagement, lender and regulatory approvals as well as legislative processes. Changes to the regulatory environment, electricity pricing mechanisms (including the transition from current internal transfer pricing mechanisms to arms length pricing between generation, NTCSA and distribution legal entities), market participation frameworks, ownership and operation of transmission infrastructure and the establishment of a mature electricity market could affect the extent to which licenced operations generate independent cash inflows and whether an active market exists for their outputs. The CGU determination will continue to be reassessed as facts and circumstances evolve and as the electricity market reforms progress. 3.3.2 Impairment assessment Modelling approach The group uses the value in use model as part of its impairment assessment to determine the recoverable amount of the Eskom CGU. The value in use calculation was based on the estimated future cash flows discounted to their present value based on the future revenue and cost to operate and maintain the assets over their useful lives. Estimates in the value in use calculation include long-term growth rates, electricity sales volumes, price path (regulated tariff ), available generation capacity from existing IPPs and specific generating capacity and discount rates. Estimates are based on past experience, approved forecasts and management’s expectations of future changes in the market developments, including the prevailing economic climate, and are subject to significant judgement and uncertainty. Key assumptions The cash flow projections used for modelling were based on the Eskom Corporate Plan for 2027 to 2031 adjusted to exclude future new capacity and expansion of assets and to incorporate relevant subsequent developments. These have been taken into account in the price and sales growth assumptions disclosure. The projections after the first five years were extrapolated based on the estimated long-term average growth rates, inflation and available capacity from existing plants. The extrapolation beyond the first five years to 2050 was deemed appropriate as the generating plants have long useful lives. The generation performance improved in 2026 with a decline in sales that resulted in excess capacity. The use of Open Cycle Gas Turbines (OCGTs) was therefore assumed at a reduced average load factor of 3.0% (2025: 3.0%) for Eskom and IPP owned plant until 2030 with an increase to 3.5% (2025: 5.5%) for Eskom plant and a reduction to 1.5% (2025: 3.0%) for IPP owned plant in 2031. The EAF of the power stations was assumed at 68.0% (2025: 64.8%) in 2027 and improving and stabilising at a 70.0% performance thereafter. Eskom will be impacted by carbon tax in December 2031 in terms of the proposed carbon tax regulations with a substantial increase in cost from 2032. Key areas of estimation uncertainty include the price path (including negotiated pricing agreements), sales growth (new electricity revenue opportunities), non-payment of electricity receivables (revenue not recognised) and discount rates. Management concluded that the key assumptions used were reasonable. 45 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 3. Capital management, going concern and impairment (continued) 3.3 Impairment assessment of the Eskom CGU (continued) 3.3.2 Impairment assessment (continued) Key assumptions (continued) Price The price path was based on the NERSA MYPD 6 approved price increase (including adjustment for recovery of a portion of relevant RCA balances and settlement of the MYPD 6 revenue re-determination) for 2027 (8.76%) and 2028 (8.83%) and an average of 5.8% from 2029 until 2050. The price increases used for the Eskom CGU were: Year ended 31 March 2027 2028 2029 2030 2031 2032 % % % % % % 2026 Price increase 9 9 6 6 6 6 Year ended 31 March 2026 2027 2028 2029 2030 2031 % % % % % % 2025 Price increase 13 9 9 9 9 8 The long-term price path remains a significant source of estimation uncertainty considering future tariff increases (including the outcome of the MYPD 7 process expected to be applicable from 2029), RCA decisions and the ability to liquidate into the future, revenue recovery mechanisms and the extent to which tariffs become cost reflective subject to regulatory approval and future market developments. Sales growth The average sales growth rate from 2027 to 2034 was negative 1% with sales from 2034 limited to available production capacity of power stations existing at 31 March 2026, resulting in a negative long-term sales growth rate of approximately 7% (2025: 5%). It was assumed that there will be no new electricity production sources from Eskom or IPPs. Non-payment of electricity receivables The non-payment percentage used remained the same over the forecast period with no improvement and no further decline in payment levels on overdue municipality debt based on the latest outlook for municipalities. Discount rate A pre-tax nominal discount rate of 15.6% (2025: 15.6%) was used as per the NERSA MYPD 6 determination. Sensitivity analysis Price An increase of 0.5% in price in 2029 will result in an increase of R11.2 billion (2025: R10.8 billion) in the recoverable amount. A reduction of 0.5% in the price in 2029 will result in a decrease of R11.2 billion (2025: R10.8 billion) in the recoverable amount. The recoverable amount of the Eskom CGU may be lower than the carrying amount if the long-term price path after 2028 is limited to inflationary increases. Sales growth An increase of 1% in total sales volumes will result in an increase of R13.0 billion (2025: R13.1 billion) in the recoverable amount. A 1% reduction in sales volumes will result in a decrease of R13.5 billion (2025: R13.1 billion) in the recoverable amount. Non-payment of electricity receivables A 0.5% decrease in the revenue not recognised will result in an increase of R17.4 billion (2025: R17.3 billion) in the recoverable amount. An increase of 0.5% in the revenue not recognised will result in a decrease of R17.4 billion (2025: R17.3 billion) in the recoverable amount. Discount rate A 1% decrease in the discount rate will result in an increase of R48.1 billion (2025: R53.9 billion) in the recoverable amount. A 1% increase in the discount rate will result in a decrease of R43.2 billion (2025: R48.1 billion) in the recoverable amount. Conclusion No impairment loss was recognised on the Eskom CGU as the recoverable amount of the Eskom CGU was higher than the carrying amount by R14.6 billion (2025: R57.7 billion). The estimated value in use exceeds the carrying amount with 2.3% (2025: 9.0%). A decrease of 0.7% in price, increase of 0.4% in non-payment of electricity receivables and an increase of 0.3% in discount rate will result in the recoverable amount being equal to the carrying amount. Eskom continues to face pressure regarding tariffs and the affordability thereof as well as challenges with non-payment of receivables which resulted in lower forecast assumptions compared to the prior year which can reasonably be supported in the value in use model and resultant recoverable amount consideration. 46 4. Key sources of estimation uncertainty, critical accounting estimates and assumptions The estimates and assumptions discussed in this note represent key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. The methods and types of assumptions used in preparing the sensitivity analyses did not change compared to the previous period unless specifically indicated. Sensitivity analyses are calculated based on a change in a single key assumption keeping all other assumptions constant. It is unlikely that changes in assumptions would occur in isolation from one another in practice. All relevant inputs as well as sensitivities have then been provided for the key sources of estimation uncertainty. Summary of key material uncertainties: Aspect Note Uncertainties Sensitivities and judgements Going concern and liquidity 3.2, 5.1, 20, 25, 31 • Municipal debt • Sales volumes • Plant performance and reliability • Generation output and energy availability • Electricity market reform, including assumptions establishment of an independent • Long-term tariff increases transmission system operator • Timing of unbundling activities • Electricity demand assumptions • Municipal debt collection rates Impairment assessment – 3.3 • Price path including NPAs • Price and RCAs determination and liquidation Eskom CGU • Long term sales growth timing • Municipal debt • Revenue growth • Electricity market reform and future • Revenue not recognised industry structure • Discount rate • Current group operating structure Embedded derivatives 4.1, 16 • Unobservable inputs • Price curves • Volatility • Consumption estimates • Correlations • Commodity price forecasts and proxy market assumptions Employee benefit obligations 4.2, 4.3, 4.4, 27 • Actuarial assumptions about • Discount rate demographic and financial variables • Medical inflation • Longevity • Long-term price inflation • Leave usage Provisions 4.5, 28 • Long-term cost and timing of expected • Discount rate outflows • Cost assumptions • Timing of cash flows Expected credit losses 4.7, 5.1, 20 • Recoverability of municipal and • Probability of default customer receivables • Recovery rates • Economic overlays Property, plant and 2.4, 8 • Useful lives • Useful lives equipment • Residual values • Residual values • Asset utilisation Deferred tax assets 14 • Availability of future taxable profits and • Forecast taxable profits utilisation of assessed losses • Timing of reversal of temporary differences • Utilisation of assessed losses • Capital allowance forecasts • Tariff and operating performance assumptions Contingent liabilities 45 • Illicit prepaid tokens created • Non-technical losses • Outcome of investigations and legal proceedings 47 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 4. Key sources of estimation uncertainty, critical accounting estimates and assumptions (continued) 4.1 Embedded derivatives Eskom entered into agreements to supply electricity to electricity-intensive businesses where the revenue from the contracts is based on approved tariffs with a possible upside charge that is applicable when predefined thresholds are exceeded. These upside charges resulted in option-based embedded derivatives with the following features: Commodity Trigger condition Applicable period Aluminium Applicable if both the aluminium price and the foreign exchange rate simultaneously August 2021 – July 2031 exceed predefined thresholds Ferrochrome Applicable when the ferrochrome price exceeds predefined thresholds January 2024 – December 2029 Silicomanganese Applicable when the silicomanganese price exceeds predefined thresholds April 2025 – March 2031 The valuation of the embedded derivatives reflects the remaining benefit to Eskom attributable to the upside charge when the thresholds are exceeded. Valuation Valuation techniques are used to determine the fair value as there is no active market for embedded derivatives. The embedded derivatives are valued independently from the host contracts. A Monte Carlo valuation method was used which simulates random paths for commodity prices (aluminium, ferrochrome and silicomanganese) and the USD/ZAR exchange rate. The simulation paths allow for varying outcomes depending on whether the simulated prices are above or below the threshold levels. The fair value of the embedded derivatives reflects a probability-weighted estimate of the upside benefit to Eskom based on these simulations. Input and valuation assumptions The key valuation approaches and methodologies include the following: • Commodity forecasting and price Commodity Valuation approach Key methodology and assumptions Aluminium Price forecasting Aluminium prices were modelled using the Schwartz one factor model, calibrated to observable futures prices and at-the-money European options on futures contracts traded on the London Metal Exchange. Aluminium and USD/ZAR Correlation The correlation between aluminium prices and the USD/ZAR exchange rate was estimated modelling using log return correlations in outlier scenarios, reflecting global economic shock conditions where commodities tend to appreciate as the global economy deteriorates. Ferrochrome Price forecasting Ferrochrome prices were modelled using the Schwartz one factor model with a commodity (proxy-based) proxy as no exchange traded ferrochrome futures market exists. Nickel was selected as the proxy due to its strong correlation with ferrochrome demand and similar end use in stainless steel production. Silicomanganese Price forecasting Silicomanganese prices were modelled using the Schwartz one factor model with a (proxy-based) commodity proxy as no deep and liquid silicomanganese derivatives market exists. Zinc was selected based on economic relevance and observable market data. • Volatility assumptions for aluminium, nickel, zinc and USD/ZAR were based on implied volatilities of at-the-money options traded in observable markets. • Counterparty credit risk was calculated by using the marginal probabilities of default (hazard rate model calibrated to the counterparty’s credit default swap spreads), weighted by the present value of expected future exposure at each cash flow date. • Projected cash flows were simulated and discounted at the appropriate risk-free rates using forward USD/ZAR rates (basis adjusted) and underlying commodity prices (in US dollar) and then valuing the payoff using Monte Carlo methods. The average simulated upside tariffs over the remaining contract term were discounted to the valuation date using the ZAR three-month swap zero curve. • Consumption estimates and electricity load factor assumptions were aligned to operational expectations, including potential contract modifications, updated customer production outlooks and the exclusion of four smelters that are currently idle and under care and maintenance. • The United States and South African Producer Price Index (PPI) are significant unobservable inputs used in the model. Other inputs were obtained from appropriate market data providers or were otherwise modelled using market standard modelling procedures which do not attract significant uncertainty or judgement. NERSA approved Eskom’s request to relax the take-or-pay criteria for ferrochrome contracts on 29 January 2026 that allows for billing based on actual consumption and not minimum contracted values. NERSA approved a temporary electricity tariff reprieve of 87.74c/kWh, effective from 1 February 2026 to 31 January 2027. The potential impact has been considered in the consumption estimates. The tariff reprieve of 62c/kWh approved by NERSA on 29 May 2026 was not incorporated in the current forecast consumption estimates. It is expected that consumption will increase and therefore impact the valuation of the embedded derivatives in future reporting periods. 48 The following valuation assumptions were used and are regarded as the best estimates by management: 2026 Year ended 31 March Input Unit 2026 2027 2028 2029 2030 2031 Aluminium price USD per ton 3 521 3 170 2 913 2 805 2 769 2 757 Aluminium volatility Year-on-year (%) 42.65 22.10 18.60 18.60 18.60 18.60 Ferrochrome price USD per ton 2 181 2 256 2 310 2 374 2 418 n/a Nickel price USD per ton 16 916 17 607 18 196 18 740 19 298 n/a Nickel volatility Year-on-year (%) 29.21 24.15 22.94 22.94 22.94 n/a Silicomanganese price USD per ton 1 308 1 270 1 193 1 135 1 127 1 124 Zinc price USD per ton 3 220 3 197 3 073 2 964 2 964 2 964 Zinc volatility Year-on-year (%) 25.73 24.78 24.43 24.43 24.43 24.43 ZAR/USD ZAR per USD 17.00 17.37 17.82 18.33 18.92 19.52 USD/ZAR volatility Year-on-year (%) 19.06 13.55 14.14 14.38 14.54 14.70 Rand interest rates Annual actual/365 days (%) 6.66 7.64 7.46 7.58 7.71 7.86 Dollar interest rates Annual actual/365 days (%) 3.75 3.75 3.67 3.63 3.64 3.68 South African PPI Year-on-year (%) 4.60 4.50 4.30 4.20 4.20 4.20 United States PPI Year-on-year (%) 1.60 1.40 1.40 1.30 1.30 1.30 Electricity usage – aluminium Electricity usage per maximum capacity (%) 96.42 96.42 96.42 96.42 96.42 96.42 Electricity usage – ferrochrome Electricity usage per maximum capacity (%) 23.16 23.16 23.16 23.16 23.16 23.16 Electricity usage – silicomanganese Electricity usage per maximum capacity (%) 80.21 80.21 80.21 80.21 80.21 80.21 2025 Year ended 31 March Input Unit 2025 2026 2027 2028 2029 2030 Aluminium price USD per ton 2 518 2 573 2 608 2 644 2 678 2 707 Aluminium volatility Year-on-year (%) 16.99 17.70 17.05 17.05 17.05 17.05 Ferrochrome price USD per ton 1 830 1 890 1 900 1 917 1 949 1 973 Nickel price USD per ton 15 698 16 481 17 193 17 898 18 601 19 356 Nickel volatility Year-on-year (%) 20.85 22.56 25.05 25.05 25.05 25.05 ZAR/USD ZAR per USD 18.31 18.75 19.25 19.82 20.49 20.96 USD/ZAR volatility Year-on-year (%) 13.97 14.20 14.67 14.91 14.91 15.62 Rand interest rates Annual actual/365 days (%) 7.44 8.24 7.72 7.85 8.00 8.19 Dollar interest rates Annual actual/365 days (%) 4.50 4.03 3.77 3.69 3.69 3.68 South African PPI Year-on-year (%) 2.20 2.20 2.50 2.50 2.50 2.50 United States PPI Year-on-year (%) 2.00 1.80 1.60 1.40 1.40 1.30 Electricity usage – aluminium Electricity usage per maximum capacity (%) 97.14 97.14 97.14 97.14 97.14 97.14 Electricity usage – ferrochrome Electricity usage per maximum capacity (%) 58.04 48.72 48.72 48.72 48.72 48.72 Sensitivity analysis The effect on profit/loss before tax of an increase or decrease in the significant assumptions is: Group and company 2026 2025 increase decrease increase decrease Input Unit Change in assumption Rm Rm Rm Rm Aluminium price USD per ton 10% relative 204 (205) 450 (339) Aluminium volatility Index 1% absolute 3 (3) 22 (24) Ferrochrome price USD per ton 10% relative 476 (344) 1 461 (1 173) Nickel volatility Index 10% relative 18 (18) 108 (108) Silicomanganese price USD per ton 10% relative 84 (65) – – Zinc volatility Index 10% relative 15 (16) – – ZAR/USD – Aluminium Rand per USD 10% relative 537 (277) 186 (220) Rand interest rates Continuous actual/365 days (%) 100 basis points (15) 15 (26) 27 Dollar interest rates Annual actual/365 days (%) 100 basis points (63) 67 (57) 54 South African PPI Index 1% absolute (57) 59 (38) 6 United States PPI Index 1% absolute 7 (14) (92) 58 4.2 Post-employment medical benefits Valuation The estimated present value of the anticipated expenditure for both in-service and retired members is calculated by independent actuaries using the projected unit credit method annually. This method accounts for the accrued service liability separately from the current cost liability. The accrued service liability is based on the completed service to the valuation date for the in-service members and the full liability in respect of retired members. The current cost liability is the cost of providing the benefit over the next year. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. The fund is exposed to inflation risk, interest rate risks and changes in the life expectancy of beneficiaries. 49 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 4. Key sources of estimation uncertainty, critical accounting estimates and assumptions (continued) 4.2 Post-employment medical benefits (continued) Valuation (continued) Valuation assumptions The principal actuarial assumptions used were: Group Company Unit 2026 2025 2026 2025 Discount rate % 10.6 13.0 10.6 13.0 Medical aid inflation % 6.7 8.7 6.7 8.7 Male longevity years 14.4 14.4 14.4 14.4 Female longevity years 20.8 20.8 20.8 20.8 Weighted average duration years 16.4 17.2 16.1 16.9 Assumptions regarding future mortality have been based on published mortality tables and statistics derived from experience. Sensitivity analysis The effect of an increase or decrease in the assumptions is: Group Company 2026 2025 2026 2025 Change in increase decrease increase decrease increase decrease increase decrease assumption Rm Rm Rm Rm Rm Rm Rm Rm Effect on aggregate current service cost and finance cost Discount rate 1% (227) 278 (236) 287 (202) 248 (210) 257 Medical aid inflation 1% 559 (445) 533 (429) 506 (403) 483 (389) Future mortality 1 year 71 (72) 71 (72) 66 (67) 66 (67) Effect on post-employment medical benefits obligation Discount rate 1% (2 844) 3 542 (2 376) 2 936 (2 590) 3 221 (2 171) 2 677 Medical aid inflation 1% 3 576 (2 905) 2 972 (2 433) 3 250 (2 646) 2 709 (2 222) Future mortality 1 year 553 (558) 469 (474) 517 (521) 440 (444) 4.3 Pension benefits Valuation The estimated present value of the anticipated expenditure for both in-service and retired members is calculated by independent actuaries using the projected unit credit method annually. This method accounts for the accrued service liability separately from the current cost. The accrued service liability is based on the completed years of service to the valuation date in respect of current in-service members and the full liability in respect of pensioners. The current cost liability is the cost of providing the benefit over the next year. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. The liability is compared to the fair value of the plan assets to determine a resultant deficit or surplus (which would be subject to an asset ceiling). The fair value of the plan assets represents the market value of the assets. The fund is exposed to inflation, interest rate risks, changes in the life expectancy of pensioners, changes in the age profile of members, equity and debt market risk and foreign exchange risk. Valuation assumptions The principal actuarial assumptions used were: Group and company Unit 2026 2025 Discount rate % 10.6 13.0 Long-term price inflation rate % 4.7 6.7 Future salary inflation % 6.2 8.2 Future pension increases % 4.7 6.7 Male longevity years 13.5 13.5 Female longevity years 19.7 19.7 Weighted average duration years 14.7 14.5 Assumptions regarding future mortality have been based on published mortality tables and statistics derived from experience. Sensitivity analysis The effect on fund obligations of an increase or decrease in the assumptions is: Group and company 2026 2025 Change in increase decrease increase decrease assumption Rm Rm Rm Rm Discount rate 1% (8 498) 10 252 (7 579) 8 773 Inflation rate 1% 10 655 (9 021) 9 239 (8 063) Future mortality 1 year (2 033) 1 984 (1 799) 1 752 50 4.4 Occasional and service leave Valuation An actuarial valuation is done on an annual basis for occasional and service leave. The accrued liability is determined by valuing all future leave expected to be taken and payments to be made in respect of benefits up to the valuation date. Allowance is made for the assumed benefit options employees will exercise and salary increases up to the date the benefit is estimated to be paid. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. Valuation assumptions The principal actuarial assumptions used were: Group and company 2026 2025 % % Discount rate 10.6 13.0 Long-term price inflation rate 4.7 6.7 Salary inflation rate 6.2 8.2 Leave usage 8.0 8.0 Assumptions regarding future mortality have been based on published mortality tables and statistics derived from experience. For details regarding current longevities underlying the values of the occasional and service leave obligation at the reporting date refer to note 4.2. Sensitivity analysis Based on current experience, 8% (2025: 8%) of the leave is utilised. If the rate at which leave is taken is 16% (2025: 16%), then the liability will increase by R126 million (2025: R112 million) for the group and R101 million (2025: R90 million) for the company. If the rate at which leave is taken is 4% (2025: 4%), then the liability will decrease by R71 million (2025: R64 million) for the group and R57 million (2025: R51 million) for the company. The carrying amount of the occasional and service leave liability for the group is R1 638 million (2025: R1 447 million) and R1 278 million (2025: R1 125 million) for the company. 4.5 Power station-related environmental restoration and mine-related closure, pollution control and rehabilitation Valuation These provisions are determined by discounting the current estimated future decommissioning and rehabilitation costs. The present value of the obligation is determined by using government bonds which have maturities similar to the liability. Valuation assumptions and estimated payment dates The real discount rates used for these provisions and estimated payment dates of the costs are: Group and company 2026 2025 % Year % Year Nuclear plant 4.5 2045–2060 5 2045–2060 Coal, pump storage, open cycle gas turbine and renewable stations 4.4–4.5 2027–2099 4.3–5.0 2027–2099 Spent nuclear fuel 4.4–4.5 2027–2100 4.3–5.0 2026–2100 Mine-related closure, pollution control and rehabilitation 4.4–4.5 2027–2159 4.3–5.0 2026–2159 Sensitivity analysis The effect on the provisions of an increase or decrease in the real discount rate is: Group and company 2026 2025 Change in increase decrease increase decrease assumption Rm Rm Rm Rm Nuclear plant 1% (1 081) 1 733 (1 048) 1 338 Coal, pump storage, open cycle gas turbine and renewable stations 1% (2 661) 3 328 (2 302) 2 874 Spent nuclear fuel 1% (2 044) 3 038 (1 690) 2 471 Mine-related closure, pollution control and rehabilitation 1% (1 647) 2 173 (1 319) 1 724 4.6 Revenue from contracts with customers Customer connections Connection charges are charged to customers in exchange for connection to the group’s electricity network. This connection enables the group to sell electricity to these customers over the estimated customer relationship period. The customer relationship period refers to the period the customer remains a purchaser of electricity from the group at a given point of supply. A period of 25 years was determined after considering, inter alia, assumptions about the life-cycle of the distribution network used to supply electricity to customers. Collectability of amounts receivable Revenue may only be recognised if it is probable at the time of sale that the revenue is likely to be recovered from the customer. This recoverability requirement is not considered to have been met in contracts with customers who have a poor payment history and for which the group does not have the ability to manage the credit risk due to external facts and circumstances (for example socio-economic or political reasons). The group accounts for revenue from these contracts on a cash (rather than accrual) basis. Where the recoverability requirement is met, revenue is recognised on an accrual basis. The risk of non-collection is reflected in the expected credit loss as an impairment expense rather than an adjustment to the revenue recognised. 51 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 4. Key sources of estimation uncertainty, critical accounting estimates and assumptions (continued) 4.7 Expected credit loss on financial assets The expected credit loss on financial assets is calculated using the following formula: Expected credit loss = Exposure at default x Probability of default x Discounted loss given default The exposure is the estimated amount outstanding at the point of default less any collateral held. The probability of default measures the likelihood that the amount outstanding will become more than 90 days past due, and depending on the portfolio, this is either on a 12-month or lifetime basis in accordance with IFRS 9 requirements. The loss given default measures the expected credit loss in the event that the outstanding amount becomes more than 90 days past due. Cash flows are discounted at the original effective interest rate over the expected recovery period. The determination of expected credit losses involves significant judgement and estimation uncertainty, particularly in relation to the probability of default, loss given default, forward-looking economic assumptions and the application of management overlays. The financial assets that are subject to IFRS 9 impairment are stratified using factors such as the balance type, credit risk rating, existence and type of collateral, remaining term to maturity, delinquency status and geographical location. An economic overlay in the form of a five-year forward-looking scaler that incorporates economic variables (including gross domestic product and exchange rate growth) has been applied to international electricity receivables, intercompany trade and other receivables, other receivables, finance lease receivables, loans receivables (excluding home loans and municipal payment arrangements), investments and financial guarantee portfolios. It was not necessary to apply an economic overlay to the municipality, large power and small power user portfolios as the models to determine the probability of default are considered sensitive to the economic environment and representative of the most recent economic conditions. An additional expected credit loss of R590 million (2025: R1 002 million) was applied to the municipality portfolio to address the possible impact of future debt write-offs arising from the municipal debt relief arrangement. A further expected credit loss overlay of R408 million was applied to a metropolitan municipality due to an increase in credit risk arising from liquidity constraints. The following details are applicable to the models used for the various financial asset balances: Financial asset Model details International electricity Expected credit losses were calculated using a benchmark approach that assigns a probability of default to a client receivables based on the size and country in which the client operates. Credit ratings were assigned to these categories which were then used to determine the probability of default. A five-year economic forward-looking scaler was applied to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Local large and small power Expected credit losses were calculated using a provision matrix which utilises a transition approach. The probability of user electricity receivables default is defined as the likelihood of an obligor defaulting over a future time period. The loss given default approach considers both historical and expected future recoveries in the estimation. Future recoveries are determined based on historical experience and extrapolated to incomplete workouts using a development factor approach. Intercompany loans The expected credit losses were calculated using a dual rating approach, which relies on key financial ratios to receivable determine a through-the-cycle probability of default. The through-the-cycle probability of default was updated with economic information to produce a point-in-time probability of default, which is consistent with the current and future forecasted economic conditions. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Intercompany trade and The estimates of the probability of default were based on the external rating of Eskom mapped to an internal rating other receivables scale. A five-year economic forward-looking scaler was applied to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Other receivables, finance Expected credit losses were calculated using a benchmark approach that assigns a probability of default to a client lease receivables and loans based on the size and country in which the client operates. Credit ratings were assigned to these categories which receivable (excluding were then used to determine the probability of default. A five-year economic forward-looking scaler was applied home loans) to the probability of default. The loss given default was calculated as a weighted average of industry benchmarks (Basel Pillar 3 disclosures). Loans receivable The estimates of the probability of default are influenced by factors including whether a client is still employed by (home loans) Eskom and whether they are in arrears. Loans are assigned a risk rating based on payment levels. Forward-looking information is based on reasonable and supportable forecasts of future economic conditions, including experience judgement. The loss in the event of default is determined as the difference between the outstanding loan amount and the amount that can be recovered through the legal collection process, which also includes the perfection of physical collateral. The historical loss experience is adjusted for current observable data to determine the loss given default. Investments and financial The estimates of the probability of default were based on the external credit ratings of the counterparts using an guarantees external rating scale mapped to an internal rating scale. A five-year economic forward-looking scaler was applied to the probability of default. Loss given default has been applied using the supervisory prescribed fixed rate of 45% in line with the Basel Framework. 5. Financial risk management The group’s integrated risk and resilience management process enables management to assess and respond to all material risks that may affect the achievement of organisational objectives. The group maintains an integrated risk and resilience management framework comprising governance structures, management policies and guidance standards with a focus on risk and resilience assessments, treatment plans, monitoring and reporting. The management of financial risks, as defined by IFRS 7 Financial Instruments: Disclosures, falls within these overarching structures, policies and standards. The management of financial risks is delegated by the board to the audit committee, which provides oversight over the financial reporting risks, and the risk committee, which provides oversight over the enterprise risk management framework. Day-to-day management of financial risks is carried out in the area in which the risks arise. 52 The group’s exposure to risk, its objectives, policies and processes for managing the risk and the methods used to measure it have been consistently applied in the years presented. The group has exposure to the following risks as a result of its financial instruments: • credit risk – the risk of financial loss to the group if a customer or other counterparty to a financial instrument fails to meet its contractual obligations • market risk – the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in foreign exchange rates, commodity prices, interest rates or equity prices • liquidity risk – the risk that the group will not have sufficient financial resources to meet its obligations when they fall due or will have to do so at excessive cost 5.1 Credit risk The carrying amounts of financial assets represent the maximum credit exposure. The group’s maximum exposure as a result of financial guarantees issued is disclosed in note 45.1. 5.1.1 Trade and other receivables Impairment analysis 2026 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Trade receivables Group International B- to BB+ 2 139 (6) 2 133 232 (189) 43 2 371 (195) 2 176 Local large power users – municipalities 13 997 (528) 13 469 6 845 (3 191) 3 654 20 842 (3 719) 17 123 0–30 days 13 230 (380) 12 850 – – – 13 230 (380) 12 850 30–90 days 767 (148) 619 – – – 767 (148) 619 More than 90 days or credit impaired – – – 6 845 (3 191) 3 654 6 845 (3 191) 3 654 Local large power users – other 13 571 (61) 13 510 270 (164) 106 13 841 (225) 13 616 0–30 days 13 462 (49) 13 413 – – – 13 462 (49) 13 413 30–90 days 109 (12) 97 – – – 109 (12) 97 More than 90 days or credit impaired – – – 270 (164) 106 270 (164) 106 Local small power users 3 010 (275) 2 735 1 592 (1 240) 352 4 602 (1 515) 3 087 0–30 days 2 550 (129) 2 421 – – – 2 550 (129) 2 421 30–90 days 460 (146) 314 – – – 460 (146) 314 More than 90 days or credit impaired – – – 1 592 (1 240) 352 1 592 (1 240) 352 32 717 (870) 31 847 8 939 (4 784) 4 155 41 656 (5 654) 36 002 Other receivables (B- to BB+) 2 490 (59) 2 431 616 (609) 7 3 106 (668) 2 438 35 207 (929) 34 278 9 555 (5 393) 4 162 44 762 (6 322) 38 440 Company International B- to BB+ 23 – 23 – – – 23 – 23 Local large power users – municipalities 13 997 (528) 13 469 6 845 (3 191) 3 654 20 842 (3 719) 17 123 0–30 days 13 230 (380) 12 850 – – – 13 230 (380) 12 850 30–90 days 767 (148) 619 – – – 767 (148) 619 More than 90 days or credit impaired – – – 6 845 (3 191) 3 654 6 845 (3 191) 3 654 Local large power users – other 13 571 (61) 13 510 270 (164) 106 13 841 (225) 13 616 0–30 days 13 462 (49) 13 413 – – – 13 462 (49) 13 413 30–90 days 109 (12) 97 – – – 109 (12) 97 More than 90 days or credit impaired – – – 270 (164) 106 270 (164) 106 Local small power users 3 009 (274) 2 735 1 592 (1 240) 352 4 601 (1 514) 3 087 0–30 days 2 549 (128) 2 421 – – – 2 549 (128) 2 421 30–90 days 460 (146) 314 – – – 460 (146) 314 More than 90 days or credit impaired – – – 1 592 (1 240) 352 1 592 (1 240) 352 30 600 (863) 29 737 8 707 (4 595) 4 112 39 307 (5 458) 33 849 Other receivables (B- to BB+) 30 140 (248) 29 892 283 (283) – 30 423 (531) 29 892 60 740 (1 111) 59 629 8 990 (4 878) 4 112 69 730 (5 989) 63 741 53 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.1 Trade and other receivables (continued) Impairment analysis (continued) 2025 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Trade receivables Group International 2 592 (14) 2 578 573 (516) 57 3 165 (530) 2 635 B- to BB+ 2 468 (9) 2 459 573 (516) 57 3 041 (525) 2 516 Below B- 124 (5) 119 – – – 124 (5) 119 Local large power users – municipalities 14 449 (885) 13 564 6 863 (4 502) 2 361 21 312 (5 387) 15 925 0–30 days 11 778 (433) 11 345 – – – 11 778 (433) 11 345 30–90 days 2 671 (452) 2 219 – – – 2 671 (452) 2 219 More than 90 days or credit impaired – – – 6 863 (4 502) 2 361 6 863 (4 502) 2 361 Local large power users – other 13 093 (39) 13 054 701 (551) 150 13 794 (590) 13 204 0–30 days 12 936 (10) 12 926 – – – 12 936 (10) 12 926 30–90 days 157 (29) 128 – – – 157 (29) 128 More than 90 days or credit impaired – – – 701 (551) 150 701 (551) 150 Local small power users 3 115 (290) 2 825 1 348 (1 055) 293 4 463 (1 345) 3 118 0–30 days 2 583 (138) 2 445 – – – 2 583 (138) 2 445 30–90 days 532 (152) 380 – – – 532 (152) 380 More than 90 days or credit impaired – – – 1 348 (1 055) 293 1 348 (1 055) 293 33 249 (1 228) 32 021 9 485 (6 624) 2 861 42 734 (7 852) 34 882 Other receivables (B- to BB+) 2 391 (93) 2 298 512 (503) 9 2 903 (596) 2 307 35 640 (1 321) 34 319 9 997 (7 127) 2 870 45 637 (8 448) 37 189 Company International B- to BB+ 13 – 13 – – – 13 – 13 Local large power users – municipalities 14 449 (885) 13 564 6 863 (4 502) 2 361 21 312 (5 387) 15 925 0–30 days 11 778 (433) 11 345 – – – 11 778 (433) 11 345 30–90 days 2 671 (452) 2 219 – – – 2 671 (452) 2 219 More than 90 days or credit impaired – – – 6 863 (4 502) 2 361 6 863 (4 502) 2 361 Local large power users – other 13 093 (39) 13 054 701 (551) 150 13 794 (590) 13 204 0–30 days 12 936 (10) 12 926 – – – 12 936 (10) 12 926 30–90 days 157 (29) 128 – – – 157 (29) 128 More than 90 days or credit impaired – – – 701 (551) 150 701 (551) 150 Local small power users 3 115 (290) 2 825 1 348 (1 055) 293 4 463 (1 345) 3 118 0–30 days 2 583 (138) 2 445 – – – 2 583 (138) 2 445 30–90 days 532 (152) 380 – – – 532 (152) 380 More than 90 days or credit impaired – – – 1 348 (1 055) 293 1 348 (1 055) 293 30 670 (1 214) 29 456 8 912 (6 108) 2 804 39 582 (7 322) 32 260 Other receivables (B- to BB+) 23 995 (326) 23 669 256 (256) – 24 251 (582) 23 669 54 665 (1 540) 53 125 9 168 (6 364) 2 804 63 833 (7 904) 55 929 54 Expected credit loss percentages used Group Company 2026 2025 2026 2025 Stage 2 Stage 3 Stage 2 Stage 3 Stage 2 Stage 3 Stage 2 Stage 3 % % % % % % % % Trade receivables International – 81 1 90 – – – – B- to BB+ – 81 – 90 – – – – Below B- – – 4 – – – – – Local large power users – municipalities 4 47 6 66 4 47 6 66 0–30 days 3 – 4 – 3 – 4 – 30–90 days 19 – 17 – 19 – 17 – More than 90 days or credit impaired – 47 – 66 – 47 – 66 Local large power users – other – 61 – 79 – 61 – 79 30–90 days 11 – 18 – 11 – 18 – More than 90 days or credit impaired – 61 – 79 – 61 – 79 Local small power users 9 78 9 78 9 78 9 78 0–30 days 5 – 5 – 5 – 5 – 30–90 days 32 – 29 – 32 – 29 – More than 90 days or credit impaired – 78 – 78 – 78 – 78 3 54 4 70 3 53 4 69 Other receivables 2 99 4 98 1 100 1 100 Age analysis of trade receivables balances 2026 20251 0–3 4–12 0–3 4–12 months months >1 year >2 years >3 years months months >1 year >2 years >3 years % % % % % % % % % % Group International 93 7 – – – 87 12 1 – – Local large power users – municipalities 88 6 1 – 5 78 15 – 7 – Local large power users – other 99 1 – – – 95 2 1 2 – Local small power users 65 20 9 3 3 70 17 7 3 3 Company International 100 – – – – 100 – – – – Local large power users – municipalities 88 6 1 – 5 82 11 – 7 – Local large power users – other 99 1 – – – 95 2 1 2 – Local small power users 65 20 9 3 3 70 17 7 3 3 1. Comparative information has been re-presented to align with the enhanced ageing analysis disclosure by disaggregating the less than one year category. 55 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.1 Trade and other receivables (continued) Reconciliation of movements in allowance for impairment 2026 2025 Stage 2 Stage 3 Total Stage 2 Stage 3 Total Note Rm Rm Rm Rm Rm Rm Group Balance at beginning of the year 1 321 7 127 8 448 1 137 6 196 7 333 Raised to the income statement 36 (16) (102) (118) 321 6 992 7 313 Reversed on payment of opening balance (987) (4 735) (5 722) (492) (1 922) (2 414) Remeasurement of opening balances held at year end (14) 896 882 4 267 271 Raised on new balances 985 3 737 4 722 809 8 647 9 456 Transfer of balances between stage 2 and 3 (228) 228 – (109) 109 – Finance income on stage 3 balances – 574 574 – 541 541 Derecognised (121) (2 015) (2 136) – (5 722) (5 722) Write-offs (27) (419) (446) (28) (989) (1 017) Balance at end of the year 20 929 5 393 6 322 1 321 7 127 8 448 Company Balance at beginning of the year 1 540 6 364 7 904 1 127 5 325 6 452 Raised to the income statement 36 (52) 145 93 546 7 096 7 642 Reversed on payment of opening balance (1 250) (4 665) (5 915) (461) (1 313) (1 774) Remeasurement of opening balances held at year end (8) 917 909 8 267 275 Raised on new balances 1 206 3 893 5 099 999 8 142 9 141 Transfer of balances between stage 2 and 3 (228) 228 – (109) 109 – Finance income on stage 3 balances – 574 574 – 541 541 Derecognised (121) (2 015) (2 136) – (5 722) (5 722) Write-offs (28) (418) (446) (24) (985) (1 009) Balance at end of the year 20 1 111 4 878 5 989 1 540 6 364 7 904 Security held for trade receivables (guarantees and deposits) Group and company 2026 2025 Fair value of security held Security Rene- Fair value of security held Security Rene- Credit- Not Total called gotiated Credit- Not Total called gotiated impaired credit- upon balances impaired credit- upon balances impaired impaired Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm International – 7 7 – – – 9 9 – – Local large power users 472 24 910 25 382 80 1 583 462 21 701 22 163 78 1 718 Municipalities 437 2 014 2 451 2 1 533 418 1 331 1 749 2 1 696 Other 35 22 896 22 931 78 50 44 20 370 20 414 76 22 Local small power users 203 3 255 3 458 138 97 185 3 119 3 304 151 83 675 28 172 28 847 218 1 680 647 24 829 25 476 229 1 801 Additional information Trade receivables Credit risk attributable to trade receivables is assessed considering the following counterparty characteristics: • geographic location of the customer (both internationally and within South Africa) • size of demand (large or small power user) • receivable ageing profile • security held (deposits and guarantees) • payment history Many residential customers are on a prepaid basis, thereby eliminating credit risk relating to these customers. The group has well established credit control measures for conventional customers that include: • increased security deposits and guarantees • conversion of customers to prepayment • early identification of and engagement with non-paying customers • negotiation of mutually acceptable payment arrangements • disconnection of supply • use of debt collectors • taking legal measures such as issuing letters of demand and pursuing adverse listing of defaulting customers All billed customers must provide security. This requirement can only be deviated from based on sound business decisions. The granting of deviations for a customer must be approved in line with the revenue security policy. 56 Progress on the collection process is regularly reviewed. Strict procedures are in place governing the write-off of trade receivables. Write-offs are considered where balances are assessed to not be collectable (for example deceased customers and businesses in liquidation after completion of business rescue). Outstanding amounts after recovery from the security held are written off once the relevant governance and legal collection processes have been followed. The process of recovery continues unless it is confirmed that there is no prospect of recovery or the costs of such action will exceed the benefits to be derived. The main classes of trade receivables are: International customers Electricity supply agreements are entered into with key international customers who comprise utility companies, governments of neighbouring countries and sundry large power users. Their payment terms are between 10 and 45 days. Impairment is assessed based on the country-specific risk. International customers are not required to provide upfront security. If they default, new payment arrangements are negotiated or supply is curtailed. Certain international customers may be required to pay upfront when their credit risk profile has changed. There were no material changes to the expected credit loss percentages for international customers compared to the prior year. Local large power users Local large power users comprise South African redistributors (metropolitan and municipal) and commercial, industrial and mining customers usually with supplies above 100kVA. Payment terms are individually negotiated and are normally a maximum of 15 days, except for certain bulk redistributing municipalities which are at a maximum of 30 days. Municipalities are required to provide security for all new supplies or where they request an upgrade of existing supply points. Security requirements for large power users are adjusted according to the risk level and may be reduced if the large power user has an acceptable credit rating from an approved rating agency. The group continues to pursue measures aimed at maximising collections from non-paying municipalities. These efforts are however constrained by prolonged litigation processes and court-granted interdicts implemented in the interests of municipal end-consumers. Interventions include: • tracking and monitoring compliance status of the municipal debt relief programme that commenced during 2024 • credit management processes • entering into payment arrangements • promoting and implementing solutions for municipalities through active partnering agreements, structured as distribution agency agreements • following the Promotion of Administrative Justice Act, 3 of 2000, processes to restrict, interrupt or terminate supply where no other options are available • restricting electricity supply if the set maximum demand levels are exceeded • issuing of summonses and legal interventions • government interventions that include participation at inter-ministerial task team subcommittees with National Treasury and the Eskom shareholder representative and supporting National Treasury processes such as possibly invoking section 216(2) of the Constitution to suspend municipalities’ equitable share where necessary The group continues to advocate for an active partnering solution under which Eskom supports municipalities through the provision of distribution, reticulation and revenue collection services. Although distribution agency agreements have been concluded with three small to medium sized municipalities and a further nine municipalities obtained council resolutions on 5 May 2026 to proceed with agency agreements, the impact of these arrangements on overall municipal credit risk has remained limited to date. National Treasury issued instruction letters to Eskom during the year to write-off one-third of the ringfenced debt of 10 municipalities to the value of R0.6 billion under the municipal debt relief programme. An additional R3.0 billion was written off for five municipalities that satisfied the required conditions this year, even though National Treasury approved the write-off in the prior financial year. National Treasury sent write-off instruction letters to Eskom after the financial year end for 21 municipalities that complied with the cycle conditions for an expected write-off of R4.0 billion in 2027. Eskom issued breach notices to municipalities that did not comply with the municipal debt relief conditions during the year, with ongoing engagement maintained with the affected municipalities and relevant stakeholders, including National Treasury. National Treasury issued letters of termination in February 2026 to 13 non-compliant municipalities as a warning. No municipalities have to date been removed from the municipal debt relief programme by National Treasury. Municipalities that are removed from the programme will become liable for their remaining outstanding arrear debt including any subsequent interest and penalties. The remaining debt under the ring-fenced municipal debt relief was R51.5 billion (2025: R55.1 billion) at 31 March 2026 of which R50.9 billion (2025: R54.0 billion) related to municipalities accounted for on the cash basis in terms of IFRS 15 with no further financial impact expected thereon as any future write-offs will offset against previous revenue and interest not recognised. The remaining arrear debt balance of R0.6 billion (2025: R1.1 billion), consisting of arrear debt of R0.5 billion and VAT of R0.1 billion, was fully impaired at 31 March 2026. The City of Johannesburg, City of Ekurhuleni and King Sabata Dalindyebo municipalities entered into payment arrangements with Eskom during the year to settle arrear debt. These arrangements were assessed as financial asset contract modifications and, as the modifications were considered qualitatively substantial, resulted in the derecognition of the trade receivables and the recognition of loan receivables. Refer to notes 5.1.5 and 15. Eskom and Transnet settled a disputed debt on 31 March 2026, agreeing to revenue and interest adjustments and arranging payment of the R0.3 billion balance received on 29 April 2026, which reduced the associated expected credit loss. There were no other material changes to the expected credit loss percentages compared to the prior year. Local small power users Local small power users comprise local customers that have a supply of 100kVA or less in size. Payment terms for small power customers are 30 days. New customers are required to provide security equivalent to consumption of between one to three months at the commencement of the supply agreement. The level of security is reviewed if a customer defaults on its payment obligation or requires additional electricity supply capacity. Additional security is required in these instances to cover between one to three months of recent consumption before supply will commence. All new customers will preferably be on prepayment terms. The residential revenue management strategy continues to be implemented with a focus on converting customers to prepaid. There were no material changes to the expected credit loss percentages for small power users compared to the prior year. 57 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.1 Trade and other receivables (continued) Additional information (continued) Other receivables Other receivables comprise of various sundry receivables. There are no significant balances with specific repayment terms. No security is held in respect of these balances and no interest has been charged on overdue balances. There were no material changes to the expected credit loss percentages compared to the prior year. 5.1.2 Derivatives held for risk management and cash and cash equivalents Impairment analysis 2026 2025 Not Subject to Total Not Subject to Total subject to impairment subject to impairment impairment Stage 1 impairment Stage 1 Rm Rm Rm Rm Rm Rm Group Derivatives held for risk management 9 764 – 9 764 15 345 – 15 345 BBB- to AAA 3 600 – 3 600 6 644 – 6 644 B- to BB+ 6 164 – 6 164 8 701 – 8 701 Cash and cash equivalents – 124 902 124 902 – 63 761 63 761 BBB- to AAA – 14 784 14 784 – 8 673 8 673 B- to BB+ – 110 096 110 096 – 55 060 55 060 Unrated – 22 22 – 28 28 Company Derivatives held for risk management 9 858 – 9 858 15 395 – 15 395 BBB- to AAA 3 600 – 3 600 6 644 – 6 644 B- to BB+ 6 258 – 6 258 8 751 – 8 751 Cash and cash equivalents – 123 894 123 894 – 62 757 62 757 BBB- to AAA – 14 784 14 784 – 8 674 8 674 B- to BB+ – 109 108 109 108 – 54 077 54 077 Unrated – 2 2 – 6 6 The gross value of cash and cash equivalents approximate its carrying value as the impairments calculated are immaterial. The Treasury Risk Committee manages treasury exposures and credit risks for the group arising from treasury activities in the financial markets with the objective of maximising investment returns while remaining within approved credit exposure levels. The committee is chaired by the general manager of treasury, as delegated by the chief financial officer, and reports on a quarterly basis to Exco. The terms of reference of the committee is aligned to the Exco credit risk governance standards and supplemented by appropriate policies and procedures which establish the principles, limits and governance requirements for treasury-related risks. Specific activities undertaken by the Treasury Risk Committee include the following: • assessing the credit quality of counterparties and approving credit limits based on this assessment • monitoring the adherence to credit limits • approving methodologies for the management of counterparty exposure • ensuring that, where applicable, transactions with counterparties are supported by trading agreements • facilitating and managing the issuing of financial guarantees by the group The portfolio assessment section within the treasury function provides regular feedback on all treasury credit risk-related matters to assist the Treasury Risk Committee in discharging its mandate. The management of credit risk is governed by the following policies: • trading in financial instruments is only conducted with approved counterparties after credit limits have been authorised • financial institutions and/or counterparties with an independent minimum rating of A1 are preferred for investments • all exposures are based on mark-to-market values. Transaction or close-out netting takes place in accordance with the terms and conditions of the underlying trading agreements • a minimum credit rating requirement for financial institutions is maintained to assess the risk categories by rating class and to ascertain the probability of default inherent in each rating class • approved concentration risk parameters and collateral management procedures are in place. Concentration of credit risk is managed by setting credit risk limits at a counterparty-specific level. Concentration credit risk limits are used as second tier limits in relation to counterparty credit limits. Counterparty-specific exposure is monitored against a set concentration of credit risk limits in relation to the total credit risk exposure to all counterparties Risk is measured by determining a default probability per counterparty using default probabilities assessed by rating agencies for various types of credit ratings. These default probabilities are then applied to the market value of the investment placed to determine the capital at risk. 58 The treasury department’s policy and practices are designed to preserve the independence and integrity of decision-making and ensure credit risks are accurately assessed, properly approved, continually monitored and actively managed. The following are monitored and reported on: • aggregate credit risk exposure • limits utilisation including any breaches • hold-limit exceptions • risk profile changes • risk concentrations Where the credit risk of a particular counterparty has increased, a reassessment of the valuation of the instrument is made for the following factors: • significance of financial difficulty • probability of bankruptcy • probability of breach of contract 5.1.3 Investments Impairment analysis Not Subject to impairment Total subject to Stage 1 impairment Gross Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm Rm 2026 Group Treasury investments – 22 240 (132) 22 108 22 240 (132) 22 108 BBB- to AAA – 3 003 – 3 003 3 003 – 3 003 B- to BB+ – 19 237 (132) 19 105 19 237 (132) 19 105 Insurance investments 2 483 25 959 (169) 25 790 28 442 (169) 28 273 BBB- to AAA – 1 248 – 1 248 1 248 – 1 248 B- to BB+ – 24 711 (169) 24 542 24 711 (169) 24 542 Not subject to credit risk 2 483 – – – 2 483 – 2 483 2 483 48 199 (301) 47 898 50 682 (301) 50 381 Company Treasury investments BBB- to AAA – 3 003 – 3 003 3 003 – 3 003 B- to BB+ – 19 237 (132) 19 105 19 237 (132) 19 105 – 22 240 (132) 22 108 22 240 (132) 22 108 2025 Group Treasury investments B- to BB+ – 2 649 (11) 2 638 2 649 (11) 2 638 Insurance investments 1 869 20 528 (79) 20 449 22 397 (79) 22 318 BBB- to AAA – 1 802 – 1 802 1 802 – 1 802 B- to BB+ – 18 726 (79) 18 647 18 726 (79) 18 647 Not subject to credit risk 1 869 – – – 1 869 – 1 869 1 869 23 177 (90) 23 087 25 046 (90) 24 956 Company Treasury investments B- to BB+ – 2 649 (11) 2 638 2 649 (11) 2 638 Eskom invested in a long-term fixed deposit to phase in the funding for the nuclear decommissioning provision over the remaining life of Koeberg power station in line with nuclear regulations in South Africa and in short-term fixed deposits for future debt and payment obligations. Investments are placed with approved counterparties within established risk limits and are limited to investment-grade rated banks. Deposit maturities are aligned to projected liquidity requirements, while counterparty credit risk is monitored and managed as discussed in note 5.1.2. There were no material changes to the expected credit loss percentages compared to the prior year. Escap invests in listed shares, negotiable certificates of deposit, fixed deposits, floating rate notes and bonds to satisfy its capital adequacy requirements in line with insurance regulations in South Africa. The listed shares do not expose the group to credit risk. The objective is to invest in fixed deposits and negotiable certificates of deposit in banks with an investment-grade credit rating. The group uses the highest available investment grade where investment-grade ratings are not available. 59 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.4 Finance lease receivables Impairment analysis 2026 2025 Stage 1 Stage 1 Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm Group B- to BB+ 140 (1) 139 177 (2) 175 Company B- to BB+ 90 (1) 89 94 (1) 93 There were no material changes to the expected credit loss percentages compared to the prior year. The supply of electricity to customers may be in the form of either a standard or premium power supply. A standard power supply is the least life-cycle cost technically acceptable solution as defined in the Grid Code and the Distribution Network Code whereas with a premium supply the customer’s connection requirement exceeds the specifications of a standard supply. This is achieved through the installation of premium supply equipment for which the customer is required to pay a connection charge. Connection charges for premium supply contracts were repayable on a monthly basis over a maximum period of 25 years. This payment option is no longer available for new premium supplies as the connection charges are payable upfront. The standard payment terms for trade receivables are also applied to the premium supply equipment connection charge customers. The credit risk exposure resulting from premium supply contracts is managed by monitoring payment levels of the customer’s trade receivable balance. There were no significant overdue or distressed balances relating to finance lease receivables in the current or prior financial year. Security in the form of bank guarantees is required from customers before the asset is constructed and is in place for a maximum period of 14 years to cover irrecoverable costs in the event of early termination of the supply contract. In addition, the premium supply equipment serves as security for the outstanding finance lease receivable balance. 5.1.5 Loans receivable Impairment analysis 2026 2025 Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm Group Stage 1 Home loans B- to BB+ 6 739 (4) 6 735 – – – Other loans B- to BB+ 521 (7) 514 28 – 28 7 260 (11) 7 249 28 – 28 Stage 2 Home loans B- to BB+ 66 (1) 65 – – – Other loans B- to BB+ 2 (1) 1 – – – 68 (2) 66 – – – Stage 3 Home loans Below B- 730 (460) 270 – – – Other loans Below B- 8 (8) – – – – 738 (468) 270 – – – Purchased or originated credit impaired Municipal payment arrangements CCC- to CCC+ 3 885 – 3 885 1 864 – 1 864 11 951 (481) 11 470 1 892 – 1 892 Company Stage 1 Loans to subsidiaries B- to BB+ 14 955 (80) 14 875 37 956 (419) 37 537 Purchased or originated credit impaired Municipal payment arrangements CCC- to CCC+ 3 885 – 3 885 1 864 – 1 864 18 840 (80) 18 760 39 820 (419) 39 401 60 Reconciliation of movements in allowance for impairment 2026 2025 Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total Note Rm Rm Rm Rm Rm Rm Rm Rm Group Balance at beginning of the year – – – – 17 3 267 287 Raised to the income statement 36 7 – 215 222 (9) 4 (20) (25) Reversed on payment of opening balance – – (4) (4) – – (4) (4) Remeasurement of opening balances held at year end (6) – 168 162 (14) (1) (54) (69) Raised on new balances 13 – 51 64 5 5 38 48 Transfer of balances between stages – (1) 1 – (5) (2) 7 – Assets and liabilities held-for-sale 3 3 243 249 (3) (3) (243) (249) Write-offs 1 – 9 10 – (2) (11) (13) Balance at end of the year 15 11 2 468 481 – – – – Company Balance at beginning of the year 419 – – 419 422 – – 422 Raised to the income statement 36 (339) – – (339) (5) – – (5) Reversed on payment of opening balance (182) – – (182) – – – – Remeasurement of opening balances held at year end (162) – – (162) – – – – Raised on new balances 5 – – 5 (5) – – (5) Write-offs – – – – 2 – – 2 Balance at end of the year 15 80 – – 80 419 – – 419 Home loans EFC provides loan facilities mainly for the purchase of immoveable property to the employees of the group. Credit risk policies are in place requiring employees to meet various criteria on valuation, affordability and credit history in compliance with the National Credit Act, 34 of 2005, before they are granted home loans. Home loans are extended up to a maximum of 112% of the market value of the property being purchased to cater for bond and transfer costs. Credit risk exposure is mitigated by having: • recourse to the value of the underlying properties through mortgage contracts • monthly instalments deducted from the salaries of employees Credit risk is re-assessed when an employee leaves the service of the group. Ex-employees may make arrangements for a monthly debit order or over-the-counter deposits to settle monthly instalments. EFC closely monitors properties held as collateral where the related loans are considered to be credit-impaired in order to mitigate potential credit losses. Group Unit 2026 2025 Carrying value of credit-impaired balances Rm 270 146 Fair value of properties held as security for credit-impaired loans Rm 290 386 Weighted average loan to value ratio % 92 88 Average repayment period years 15 16 Eskom guarantees all losses that EFC incurs where the loan granted by EFC exceeded 80% of the market value of the property at the time of origination. Refer to note 45 for details regarding this guarantee. Municipal payment arrangements The municipal payment arrangements consist of interest free loans concluded with metropolitan and local municipalities (City of Tshwane, City of Johannesburg, City of Ekurhuleni and King Sabata Dalindyebo) for the settlement of arrear debt. These restructured receivables are classified as purchased or originated credit-impaired financial assets as they were credit-impaired at initial recognition. The arrangements were recognised at amortised cost using a credit-adjusted effective interest rate. There have been no changes in the lifetime expected credit loss since initial recognition. Loans to subsidiaries Loans to subsidiaries consist of loans by Eskom to subsidiaries, mainly to NTCSA, EFC and ERI. The Treasury Risk Committee manages credit risk arising from loans to subsidiaries to reduce the costs for the group and continuously monitor the liquidity and solvency of the group. The term loan to NTCSA has a maturity date of June 2042 and is repayable quarterly. Finance costs are charged based on Eskom’s underlying weighted average cost of servicing the relevant external debt incurred by Eskom to finance the loan. NTCSA exercised the voluntary prepayment option under the original loan agreement and repaid R21 795 million of the term loan on 31 March 2026 resulting in a loss of R360 million recognised within other expenses. The ERI loan was refinanced by Eskom during the year and is repayable on 31 October 2027. The loan to EFC is a revolving facility with no fixed repayment terms. There were no material changes to the expected credit loss percentages compared to the prior year. Eskom provided letters of support for financial assistance to ERI and EFC. 61 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.1 Credit risk (continued) 5.1.5 Loans receivable (continued) Assets held-for-sale Stage 1 Stage 2 Stage 3 Total Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying Gross Allowance Carrying for value for value for value for value impairment impairment impairment impairment Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm 2025 Group Home loans 6 884 (2) 6 882 303 (3) 300 384 (238) 146 7 571 (243) 7 328 B- to BB+ 6 884 (2) 6 882 303 (3) 300 – – – 7 187 (5) 7 182 Below B- – – – – – – 384 (238) 146 384 (238) 146 Other loans 432 (1) 431 2 – 2 5 (5) – 439 (6) 433 B- to BB+ 432 (1) 431 2 – 2 – – – 434 (1) 433 Below B- – – – – – – 5 (5) – 5 (5) – 7 316 (3) 7 313 305 (3) 302 389 (243) 146 8 010 (249) 7 761 5.2 Market risk A significant part of market risk encountered by the group arises from financial instruments that are managed centrally within the group’s treasury department. The objective of the group’s market risk management framework is to protect and enhance the statement of financial position and profit or loss by managing and controlling market risk exposures and to optimise the funding of business operations and facilitate capital expansion. The basis for calculating risk and sensitivity measures is consistent with the prior year. Sensitivity analyses assumes that only the input being analysed changes with all other variables remaining constant. Financial instruments mainly managed by the treasury department The treasury department is responsible for managing market risk within the risk management framework approved by Exco and the Board. The overall authority for the management of market risks within the treasury department is vested in the Treasury Risk Committee. Measurement and reporting occur on a daily and/or monthly basis and is performed by an independent section within the treasury department. Financial derivatives are used to manage market risk. Financial instruments managed by various divisions and subsidiaries of Eskom Market risk arises mainly from changes in foreign exchange rates and, to a limited extent, commodity and equity prices. The divisions and subsidiaries of Eskom are responsible for identifying the exposure arising from these risks. They liaise with the centralised treasury department to hedge (economic and cash flow hedges) these exposures appropriately on their behalf. 5.2.1 Currency risk Currency risk arises primarily from purchasing imported goods and services directly from overseas or indirectly via local suppliers, foreign sales and foreign borrowings. The group is exposed to foreign exchange risk arising from future commercial transactions and recognised assets and liabilities that are denominated in a currency other than the functional currency of the group. All transactions more than R750 000 (2025: R150 000) are hedged (ie economic or cash flow hedges). The hedging approach and associated thresholds are reviewed annually and approved by the Chief Financial Officer. Currency exposure is identified by the business and hedged and managed by the central treasury department. Hedging instruments consist of cross-currency swaps and forward exchange contracts. Most of the forward exchange contracts have a maturity of less than one year from the reporting date and are rolled over at maturity when necessary. Hedging instruments are entered into once the exposure is firm and ascertainable. 62 Foreign currency exposure (notional amounts in millions per currency) EUR USD GBP CNY JPY NOK SEK 2026 Group Liabilities Debt securities and borrowings (514) (5 211) – (9 465) – – – Trade and other payables (15) (51) – – – – (6) Gross statement of financial position exposure (529) (5 262) – (9 465) – – (6) Estimated forecast purchases1 (195) (436) (21) – (1 205) (7) (332) Gross exposure (724) (5 698) (21) (9 465) (1 205) (7) (338) Derivatives held for risk management 2 678 5 705 21 9 465 1 205 3 334 Net exposure (46) 7 – – – (4) (4) Company Liabilities Debt securities and borrowings (514) (5 211) – (9 465) – – – Trade and other payables (11) (6) – – – – (6) Gross statement of financial position exposure (525) (5 217) – (9 465) – – (6) Estimated forecast purchases1 (180) (320) (21) – (1 194) (7) (141) Gross exposure (705) (5 537) (21) (9 465) (1 194) (7) (147) Derivatives held for risk management 2 658 5 544 21 9 465 1 194 3 143 Net exposure (47) 7 – – – (4) (4) Mid-spot rate for one unit of the currency to the rand 19.58 16.94 22.41 2.46 0.11 1.75 1.79 2025 Group Liabilities Debt securities and borrowings (659) (6 633) – (2 792) – – – Trade and other payables (65) (25) – – – (2) (17) Gross statement of financial position exposure (724) (6 658) – (2 792) – (2) (17) Estimated forecast purchases1 (249) (442) (25) – (641) (4) (170) Gross exposure (973) (7 100) (25) (2 792) (641) (6) (187) Derivatives held for risk management 2 956 7 091 25 2 792 641 5 185 Net exposure (17) (9) – – – (1) (2) Company Liabilities Debt securities and borrowings (659) (6 633) – (2 792) – – – Trade and other payables (35) (18) – – – (2) (4) Gross statement of financial position exposure (694) (6 651) – (2 792) – (2) (4) Estimated forecast purchases1 (238) (345) (25) – (641) (4) (151) Gross exposure (932) (6 996) (25) (2 792) (641) (6) (155) Derivatives held for risk management 2 915 6 987 25 2 792 641 5 153 Net exposure (17) (9) – – – (1) (2) Mid-spot rate for one unit of the currency to the rand 19.81 18.31 23.66 2.52 0.12 1.74 1.82 Sensitivity analysis Group Company 2026 2025 2026 2025 1% 1% 1% 1% 1% 1% 1% 1% increase decrease increase decrease increase decrease increase decrease Rm Rm Rm Rm Rm Rm Rm Rm Profit/(loss) before tax ZAR/EUR exposure 24 (24) 47 (47) 20 (20) 39 (39) ZAR/USD exposure 110 (110) 132 (132) 84 (84) 114 (114) ZAR/other currency 18 (18) 6 (6) 15 (15) 6 (6) Equity ZAR/EUR exposure 10 (10) 15 (15) 10 (10) 15 (15) ZAR/USD exposure 21 (21) 33 (33) 21 (21) 33 (33) ZAR/other currency 4 (4) 5 (5) 4 (4) 5 (5) 1. Represents future purchases contracted for. 2. Includes notional value and accrued interest. 63 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.2 Market risk (continued) 5.2.2 Commodity risk The group is exposed to commodity risk where commodities are either used directly (liquid fuels) or indirectly as a component of plant, equipment or inventory (eg aluminium, copper or steel). The exposures are hedged economically by means of commodity forwards and options. Economic hedging is applied where it is practical (a relevant hedging instrument exists) based on the optimal economic solution and in compliance with the South African Reserve Bank requirements. The group is exposed to price risk on diesel (low sulphur gas oil) used in the generation of electricity at the OCGT power stations and on fuel oil (bunker fuel oil) used to manage the temperature of heat generating components at the coal-fired power stations. Prices are determined by the Department of Mineral and Petroleum Resources based on the price of brent crude oil, refining margins and US dollar exchange rates. The group had no material exposure to commodities that formed a part of plant, equipment or inventory. Commodity exposure Group and company 2026 2025 Estimated Derivatives Net Estimated Derivatives Net forecast held for risk exposure forecast held for risk exposure purchases management purchases management Unit (notional) (notional) Low sulphur gas oil kilo litres 203 661 (78 000) 125 661 431 680 (103 000) 328 680 The notional volumes of the derivatives held for risk management are as follows: Group and company 2026 2025 Unit Net liability Net liability Commodity swaps kilo litres (69 700) (72 000) Zero-cost collar kilo litres (8 300) (21 000) Call options kilo litres – (10 000) (78 000) (103 000) Sensitivity analysis The group is exposed mainly to changes in the price of brent crude oil and US dollar exchange rates. The sensitivity analysis has been performed assuming that all other variables remain constant. The possible impact on profit or loss is as follows: Group and company 2026 2025 Change in increase decrease increase decrease Input Unit assumption Rm Rm Rm Rm ZAR/USD ZAR per USD 10% relative 101 (101) 66 (66) Low sulphur gas oil price USD per metric ton 10% relative 102 (102) 66 (66) 5.2.3 Interest rate risk Interest rate risk is the risk that the group’s financial position may be adversely affected because of changes in interest rate levels, yield curves and spreads. Debt securities and borrowings and derivatives held for risk management at variable rates expose the group to cash flow risk and those at fixed rates expose the group to fair value risk. The group’s policy is to restrict the maximum effective portion of the external debt (excluding the trading portfolio which is managed within the constraints of the risk management framework) exposed to an interest rate reset within the next 12-month period to 40%. The group’s quantitative exposure to interest rate risk is disclosed in note 25. Sensitivity analysis The group analyses its interest rate exposure on a dynamic basis by conducting a sensitivity analysis. This involves determining the impact on profit or loss of defined interest rate shifts. The same interest rate shift is used for each simulation for all currencies. The sensitivity analysis for interest rate risk excludes finance costs capitalised. 64 The simulation is performed monthly to verify that the maximum loss potential is within the limit set by management. The results of the simulation are included in the table below: Group Company 2026 2025 2026 2025 +100 -100 +100 -100 +100 -100 +100 -100 basis points basis points basis points basis points basis points basis points basis points basis points Rm Rm Rm Rm Rm Rm Rm Rm Profit/(loss) before tax ZAR interest rates 1 248 (1 276) 1 548 (1 612) 1 322 (1 351) 1 201 (1 242) EUR interest rates (66) 67 (77) 79 (65) 66 (74) 76 USD interest rates (797) 828 (1 525) 1 602 (785) 817 (1 515) 1 591 Other currency interest rates (19) 19 (86) 88 (17) 17 (86) 88 Equity ZAR interest rates 1 966 (2 042) 1 439 (1 501) 1 966 (2 042) 1 439 (1 501) EUR interest rates (143) 147 (224) 235 (143) 147 (224) 235 USD interest rates (1 546) 1 618 (1 712) 1 793 (1 546) 1 618 (1 712) 1 793 Fixed and floating rate debt Group and company 2026 2025 fixed floating fixed floating % % % % Proportion of fixed versus floating rate debt at 31 March 57 43 54 46 The proportion of fixed versus floating rate debt was impacted by funding from China Development Bank that was converted from floating to fixed rate interest in August 2025. Refer to note 25. Interest rate benchmark reform The South African financial markets are transitioning from the Johannesburg Interbank Average Rate (JIBAR) to the South African Rand Overnight Index Average (ZARONIA). The final publication date for JIBAR is 31 December 2026. The transition will affect the group’s financial instruments that are linked to JIBAR, specifically the timing and amount of contractual cash flows, valuations and hedge accounting relationships. The group identified affected contracts and assessed the impact on accounting systems, policies and procedures. Engagement with affected counterparties is ongoing to agree on the appropriate transition terms. The transition will not result in a change to the group’s overall risk management strategy. The financial instruments at 31 March 2026 that will be transitioned to ZARONIA includes debt securities and borrowings of R8.0 billion, insurance investments of R2.9 billion and derivatives held for risk management of R4.9 billion. 5.2.4 Equity price risk Equity price risk arises from investments listed on the Johannesburg Stock Exchange. Changes in the fair value of equity securities held by the group will fluctuate because of changes in market prices caused by factors specific to the individual equity issuer or factors affecting all similar equity securities traded on the market. The investment policy is approved by the Escap board and monitored by the Escap audit and risk committees. Exposure to market risk is limited through diversification and by applying strict investment criteria. Carrying values of investments per sector Group 2026 2025 portfolio portfolio Rm % Rm % Banks, financial services and insurance 926 37 729 39 Basic materials and resources 671 27 360 19 Consumer goods and services 487 20 550 29 Other 399 16 230 13 2 483 100 1 869 100 A 1% increase or decrease in share prices would have increased or decreased profit or loss before tax by R25 million (2025: R19 million). 5.3 Liquidity risk Liquidity risk can arise from mismatches in the timing of cash flows from revenue with capital and operational outflows. Funding risk arises when the necessary liquidity to fund illiquid asset positions, such as building new electricity capacity, cannot be obtained at the expected terms and when required. The objective of the group’s liquidity and funding management is to ensure that all foreseeable operational and capital expenditure as well as debt commitments can be met under both normal and stressed conditions. The group has adopted an overall statement of financial position approach, which consolidates all sources and uses of liquidity, while aiming to maintain a balance between liquidity, profitability and interest rate considerations. The management of group liquidity and funding risk is centralised in the treasury department in accordance with practices and limits set by Exco and the Board. The group’s liquidity and funding management process includes: • projecting cash flows and considering the cash required by the group and optimising the short-term liquidity as well as the long-term funding • managing the concentration and profile of debt maturities • maintaining liquidity and funding contingency plans 65 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.3 Liquidity risk (continued) The group has an established corporate governance structure and process for managing the risks regarding guarantees and contingent liabilities. All significant guarantees issued by the group are approved by the Board and are managed on an ongoing basis by the treasury department and by Exco. The audit committee assists the Board by providing oversight over financial reporting risks and the risk committee provides oversight over the enterprise risk management framework. Refer to note 45. 5.3.1 Key liquidity indicators Group Company Restated Restated Unit 2026 2025 2026 2025 Weighted average term to maturity of debt securities and borrowings years 5.32 5.78 5.33 5.78 Working capital ratio 1.03 1.02 1.13 1.06 Cash interest cover ratio 3.80 2.76 3.02 1.96 Net debt service cover ratio 1.55 1.11 0.97 0.78 Liquid assets Rm 124 902 63 761 123 894 62 757 The cash interest cover and debt service cover ratios measure the ability to fund debt costs via cash from operations. Management has targeted 3.5 for cash interest cover and 1.5 for net debt service cover. Liquid assets are investments identified as having the potential to be quickly converted into cash and consists of cash and cash equivalents. 5.3.2 Primary sources of funding and unused facilities The primary sources to meet the group’s liquidity requirements are cash generated from operations, cash inflows from maturing financial assets, funds committed by government through the Debt Relief Act, 7 of 2023, as well as signed development finance institution facilities. No new borrowings were allowed during the period of the debt relief, unless approved by the Minister of Finance. The terms and conditions of the debt relief period after 31 March 2026 are in the process of being finalised with National Treasury and the Minister of Finance. Eskom continues to drawdown only on existing facilities that were in place at 31 March 2023. All figures are quoted in notional amounts. Group and company ZAR EUR USD 2026 2025 2026 2025 2026 2025 m m m m m m Facilities available Development financing institutions 2 480 1 118 20 60 558 632 World Bank – – – – 437 438 African Development Bank 1 080 1 118 20 60 – 2 Clean technology fund – African Development Bank – – – – 19 21 Clean technology fund – World Bank – – – – 44 47 New Development Bank 1 400 – – – – 44 Kreditanstalt für Wiederaufbau – – – – 58 80 Export credit agencies Kreditanstalt für Wiederaufbau – Hermes1 – – – 12 – – 2 480 1 118 20 72 558 632 Facilities available (rand equivalent) 2 480 1 118 392 1 426 9 453 11 572 Funds received during the year Development financing institutions 38 917 40 – 74 433 World Bank 2 – – – – 1 1 African Development Bank 3 38 917 40 – 2 2 Clean technology fund – World Bank4 – – – – 3 1 Clean technology fund – African Development Bank4 – – – – 2 15 New Development Bank 5 – – – – 44 16 Kreditanstalt für Wiederaufbau6 – – – – 22 11 China Development Bank7 – – – – – 387 38 917 40 – 74 433 Funds received during the year (rand equivalent) 38 917 783 – 1 254 7 928 The facility of R1 400 million for the battery energy storage system project with the New Development Bank and a related government guarantee was part of the 2023 borrowing programme and finalised during the year. 1. The undrawn balance of EUR12 million under the existing facility was cancelled as there were no further qualifying expenditures to be incurred. 2. Funds received were for the Komati project. 3. Funds received were for transmission projects. 4. Funds received were for the battery energy storage system project. 5. Funds received were for the renewable energy integration and transmission augmentation project. 6. Funds received were for the renewable grid integration and strengthening programme. 7. Funds received were for the Kusile power station. 66 Government guarantees Group and company 2026 2025 Domestic General Total Domestic General Total multi-term multi-term note note programme programme Rm Rm Rm Rm Rm Rm Opening balance – 2 191 2 191 – 2 191 2 191 Guarantee granted 145 768 183 000 328 768 145 768 183 000 328 768 Accumulated amounts used (145 768) (180 809) (326 577) (145 768) (180 809) (326 577) Facilities used – (1 400) (1 400) – – – Closing balance – 791 791 – 2 191 2 191 Guarantee granted 145 768 183 000 328 768 145 768 183 000 328 768 Accumulated amounts used (145 768) (182 209) (327 977) (145 768) (180 809) (326 577) The availability of the unused portion of the government guarantee facility of R350 billion expired on 31 March 2023. Capital repayments on existing government guaranteed debt facilities amounted to R13.5 billion (2025: R10.9 billion). Guarantee fees are payable to the National Revenue Fund if financial covenants ratios are higher than the specified thresholds in terms of the Guarantee Framework Agreement. The guarantee fees are calculated on the accumulated amounts used under the guarantee facility and payable by June after the end of the financial year. Eskom obtained approval from the Minister of Finance to defer payment of the fee payable until March 2027. Loan covenants There are various loan covenants, both of a financial and non-financial nature, attached to the loan facilities. The covenants are closely monitored on an ongoing basis for compliance. The group proactively notifies and engages with lenders should an event of default be anticipated to remedy the possible event before a default is triggered including obtaining an extension of a submission deadline or a waiver for a potential breach. The right to defer settlement in certain of the loan agreements is subject to assessing compliance to the loan covenants after the reporting date. These include: • submission of annual and interim financial statements within specified timelines • unqualified audit opinion on the financial statements and no reportable irregularities • environmental compliance The covenants in the loan facilities of the group generally fall into the following categories: Events of default There are various events, both of a financial and non-financial nature, that can trigger an event of default. Eskom has to notify the relevant lenders on occurrence of an event without undue delay. If an event is not cured or remedied within specified periods, it could trigger acceleration of outstanding amounts (immediately due and payable upon notice) and cancellation of undisbursed funds. Acceleration could lead to events of default and recalling of government guarantees. Cross default to other loans may be triggered in most instances. Potential events of default and mitigating measures include: • Maintain financial ratios: Key lenders require that certain financial ratios be maintained at specified levels (debt service cover ratio between 0.9 to 1.3 and a minimum EBITDA margin of 25%). Potential non-compliance is mitigated through financial action plans as detailed in the loan agreements. These include sharing of relevant financial information with lenders, such as the performance on financial measures quarterly and the Eskom Corporate Plan annually, as well as submission of annual compliance certificates. The required extensions to submit the financial action plan and supporting documentation, which includes the rationale for the non-compliance and insight into steps that Eskom can take to improve performance, were obtained for the year. There was no event of default despite Eskom not meeting the minimum financial ratios as threshold alone does not trigger an event of default. • Annual and interim financial statements submitted within specified timelines: Certain loan agreements require Eskom to submit financial statements within specified timelines after the reporting date. There could be a potential breach if a delay in the submission is not rectified within the timelines specified in the loan agreements. All potential events of default were proactively managed. Eskom engaged on a continuous basis at the highest level of governance to obtain extensions and waivers where potential delays were expected to avoid any event of default. Extension letters were received from all lenders that cover the period up to the date of issuing the financial statements to ensure compliance with the required timelines. • Unqualified audit opinion of the financial statements and no reportable irregularities: Eskom has a loan agreement where a default event could be triggered if a qualified audit opinion is issued due to PFMA non-compliance or raising of a reportable irregularity. This would lead to a potential breach if the necessary waiver is not obtained timeously. Eskom engaged proactively with the lender regarding the details and potential impact of a qualified audit opinion and reportable irregularities prior to the release of the financial statements. The relevant waiver was obtained in August 2026 to cover potential events of default arising from the audit qualification and reportable irregularities (including continued reportable irregularities) in the 31 March 2026 annual financial statements. The potential default was therefore successfully remedied. The relevant waiver has been obtained after a similar process of proactive engagement was followed to cover potential events of default, including those arising from PFMA non-compliance and reportable irregularities, up to the date of issuing the financial statements. • Information submitted within specified timelines: Information covenants include submission of project progress reports, compliance certificates and environmental reports. Any anticipated delays in submitting the required information are communicated upfront to lenders. The group financial position, operational performance, progress on the legal separation (including unbundling of the transmission system operator) and PFMA compliance were discussed during the quarterly engagements with lenders. 67 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 5. Financial risk management (continued) 5.3 Liquidity risk (continued) 5.3.2 Primary sources of funding and unused facilities (continued) Loan covenants (continued) Prepayment events Certain events could trigger the prepayment of outstanding loan balances prior to the original maturity date, usually within 30 days of notice. Potential prepayment events and mitigating measures include: • Environmental compliance: Certain obligations in the loan agreements could have been breached after the flue-gas duct failure at Kusile power station in October 2022 with emissions above allowed limits. Eskom obtained Department of Forestry, Fisheries and the Environment approval as a mitigation measure to operate temporary stacks and postpone compliance with certain emission standards while installing flue-gas desulphurisation plant equipment. Eskom proactively informed impacted lenders of the mitigation measures to uphold loan agreements obligations. Eskom addressed and implemented the recommendations in the close-out report by the environmental consultant appointed to review the mitigation measures. The lenders were satisfied with the progress achieved to date. Eskom continues proactive engagement with lenders to maintain compliance with environmental covenants requirements. Eskom has one loan agreement where an extension on the existing waiver is required from June 2027 for the delay in the installation of flue-gas desulphurisation plant equipment in each of the six units of the Medupi power station. The existing waiver remains valid and there has been no event of default or covenant breach at the time of issuing the financial statements. The lender has indicated that progress on the flue-gas desulphurisation programme will be reviewed as part of their mid-term review. • Legal separation of Eskom divisions: The legal separation process requires advance approval from lenders. Ongoing engagement is taking place with lenders regarding the future legal separation of the distribution and generation divisions and the unbundling of the transmission system operator. Suspension and cancellation events Certain events such as audit qualifications, procurement irregularities or funds not used in line with the loan conditions could trigger suspension and/or cancellation of undisbursed amounts if the event that has triggered the suspension is not cured or remedied within a specified period (usually 60 days). Eskom proactively engaged with lenders to ensure that all possible suspension and/or cancellation events are remedied in time. Independent external reviews were performed on certain facilities to ensure funds were utilised in compliance with the loan conditions and disbursements were received on these facilities. No suspensions or cancellations were triggered during the year. Representation and warranties Eskom made certain representations regarding its status and the information provided to lenders by signing the loan agreements. Making false and/or misleading representation and warranties is an event of default under all the agreements. Eskom maintained full compliance with these obligations, thereby avoiding any default events related to misrepresentations. Conclusion All possible default events and covenant breaches have been successfully remedied or waived before default. There were no loan defaults or covenant breaches at the reporting date and up to the date of approval of the financial statements. There were also no breaches that resulted in the early repayment of a facility at the reporting date. 5.3.3 Contractual cash flows The contractual undiscounted cash flows of the group’s financial assets and liabilities are indicated on the basis of their earliest possible contractual maturity. The cash flows for derivatives held for risk management are presented on a net basis in line with the classification in the statement of financial position. Contractual cash flows are a function of forward exchange rates and forward interest rates and are a point-in-time calculation that are impacted by market conditions at that time. Only cash flows relating to financial instruments and financial guarantees have been presented and do not include future cash flows expected from the normal course of business and related commodity-linked pricing agreements. 68 Cash flows Nominal 0–3 months 4–12 months 1–5 years >5 years inflow/outflow Rm Rm Rm Rm Rm 2026 Group Financial assets Loans receivable 21 020 411 1 740 7 771 11 098 Derivatives held for risk management 12 965 298 864 10 208 1 595 Finance lease receivables 180 14 40 117 9 Trade and other receivables 44 562 42 713 1 119 730 – Treasury investments 23 628 3 050 16 844 3 734 – Insurance investments 31 039 7 993 14 616 7 250 1 180 Cash and cash equivalents 124 902 124 902 – – – 258 296 179 381 35 223 29 810 13 882 Financial liabilities Debt securities and borrowings 530 751 41 787 34 943 205 373 248 6481 Derivatives held for risk management 5 404 916 4 303 1 969 (1 784) Lease liabilities 9 585 641 1 418 7 050 476 Trade and other payables 52 824 42 235 10 275 308 6 598 564 85 579 50 939 214 700 247 346 Company Financial assets Loans receivable 24 137 5 226 3 502 9 813 5 596 Derivatives held for risk management 13 059 373 883 10 208 1 595 Finance lease receivables 118 7 21 81 9 Trade and other receivables 69 582 66 407 1 891 1 284 – Treasury investments 23 628 3 050 16 844 3 734 – Cash and cash equivalents 123 894 123 894 – – – 254 418 198 957 23 141 25 120 7 200 Financial liabilities Debt securities and borrowings 543 347 54 408 34 918 205 373 248 6481 Derivatives held for risk management 5 486 950 4 351 1 969 (1 784) Lease liabilities 1 549 61 183 829 476 Trade and other payables 71 908 61 534 10 184 190 – Financial guarantees 361 361 – – – 622 651 117 314 49 636 208 361 247 340 2025 Group Financial assets Loans receivable 3 344 47 831 2 466 – Derivatives held for risk management 21 166 221 433 17 751 2 761 Finance lease receivables 234 6 49 153 26 Trade and other receivables 45 660 43 373 1 747 540 – Treasury investments 3 736 – – 3 736 – Insurance investments 24 043 7 231 12 700 4 112 – Cash and cash equivalents 63 761 63 761 – – – 161 944 114 639 15 760 28 758 2 787 Financial liabilities Debt securities and borrowings 606 739 7 183 31 260 245 374 322 9221 Derivatives held for risk management 2 257 850 2 692 1 120 (2 405) Lease liabilities 11 393 750 1 393 7 374 1 876 Trade and other payables2 52 742 43 965 8 486 289 2 673 131 52 748 43 831 254 157 322 395 Company Financial assets Loans receivable 61 227 6 139 5 019 29 995 20 074 Derivatives held for risk management 21 219 234 473 17 751 2 761 Finance lease receivables 131 – 14 94 23 Trade and other receivables 63 832 61 614 1 188 1 030 – Treasury investments 3 736 – – 3 736 – Cash and cash equivalents 62 757 62 757 – – – 212 902 130 744 6 694 52 606 22 858 Financial liabilities Debt securities and borrowings 633 211 28 249 31 434 250 606 323 9221 Derivatives held for risk management 2 275 858 2 702 1 120 (2 405) Lease liabilities 1 658 98 162 792 606 Trade and other payables2 67 851 59 238 8 353 258 2 Financial guarantees 191 191 – – – 705 186 88 634 42 651 252 776 321 125 1. The maturity profile of undiscounted contractual payments of debt securities and borrowings due after five years for group and company comprise of: – between years five and 10: R142 567 million (2025: R137 946 million) – beyond 10 years: R106 081 million (2025: R184 976 million) 2. Restated. Refer to note 49. 69 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 6. Accounting classification and fair value 6.1 Accounting classification 2026 2025 Fair value Amortised Other1 Total Fair value Amortised Other1 Total through cost through cost profit profit or loss or loss Note Rm Rm Rm Rm Rm Rm Rm Rm Group Financial assets Loans receivable 15 – 11 470 – 11 470 – 1 892 – 1 892 Home loans – 7 070 – 7 070 – – – – Municipal payment arrangements – 3 885 – 3 885 – 1 864 – 1 864 Other loans – 515 – 515 – 28 – 28 Embedded derivatives 16 1 524 – – 1 524 3 972 – – 3 972 Derivatives held for risk management 17 3 261 – 6 503 9 764 3 785 – 11 560 15 345 Foreign exchange contracts 347 – 69 416 264 – 34 298 Cross-currency swaps 1 435 – 6 434 7 869 2 872 – 11 526 14 398 Commodity forwards 443 – – 443 3 – – 3 Commodity options 27 – – 27 23 – – 23 Inflation-linked swaps 1 009 – – 1 009 623 – – 623 Finance lease receivables 18 – – 139 139 – – 174 174 Trade and other receivables 20 – 38 440 – 38 440 – 37 189 – 37 189 Treasury investments 21 – 22 108 – 22 108 – 2 638 – 2 638 Insurance investments 21 2 483 25 790 – 28 273 1 869 20 449 – 22 318 Fixed deposits and negotiable – 18 830 – 18 830 – 17 056 – 17 056 certificates of deposit Floating rate notes – 2 884 – 2 884 – 2 886 – 2 886 Inflation-linked bonds – 1 590 – 1 590 – 507 – 507 Listed shares 2 483 – – 2 483 1 869 – – 1 869 Other bonds – 2 486 – 2 486 – – – – Cash and cash equivalents 22 – 124 902 – 124 902 – 63 761 – 63 761 Bank balances – 81 760 – 81 760 – 31 684 – 31 684 Fixed deposits – 43 142 – 43 142 – 32 077 – 32 077 7 268 222 710 6 642 236 620 9 626 125 929 11 734 147 289 Financial liabilities Debt securities and borrowings 25 – 356 195 – 356 195 – 372 655 – 372 655 Eskom bonds – 174 895 – 174 895 – 169 992 – 169 992 Commercial paper – 480 – 480 – – – – Eurorand zero coupon bonds – 10 242 – 10 242 – 9 077 – 9 077 Foreign bonds – 36 789 – 36 789 – 39 419 – 39 419 Development financing institutions – 117 249 – 117 249 – 133 562 – 133 562 Export credit facilities – 15 997 – 15 997 – 20 063 – 20 063 Other loans – 543 – 543 – 542 – 542 Derivatives held for risk management 17 2 787 – 2 066 4 853 1 252 – 395 1 647 Foreign exchange contracts 314 – 98 412 347 – 77 424 Cross-currency swaps 2 398 – 1 968 4 366 802 – 318 1 120 Commodity forwards 55 – – 55 80 – – 80 Commodity options 4 – – 4 6 – – 6 Credit default swaps 11 – – 11 17 – – 17 Inflation-linked swaps 5 – – 5 – – – – Lease liabilities 29 – – 6 870 6 870 – – 7 710 7 710 Trade and other payables2 30 – 52 792 – 52 792 – 52 714 – 52 714 2 787 408 987 8 936 420 710 1 252 425 369 8 105 434 726 1. Other includes derivatives held for risk management designated as cash flow hedges measured at fair value through other comprehensive income and finance leases in terms of IFRS 16 Leases measured at amortised cost. The total assets measured at amortised cost amounted to R222 849 million (2025: R126 103 million) and the total liabilities measured at amortised cost amounted to R415 857 million (2025: R433 079 million). 2. Restated. Refer to note 49. 70 2026 2025 Fair value Amortised Other1 Total Fair value Amortised Other Total through cost through cost assets and profit profit liabilities1 or loss or loss Note Rm Rm Rm Rm Rm Rm Rm Rm Company Financial assets Loans receivable 15 – 18 760 – 18 760 – 39 401 – 39 401 Loans to subsidiaries – 14 875 – 14 875 – 37 537 – 37 537 Municipal payment arrangements – 3 885 – 3 885 – 1 864 – 1 864 Embedded derivatives 16 1 524 – – 1 524 3 972 – – 3 972 Derivatives held for risk management 17 3 355 – 6 503 9 858 3 835 – 11 560 15 395 Foreign exchange contracts 441 – 69 510 314 – 34 348 Cross-currency swaps 1 435 – 6 434 7 869 2 872 – 11 526 14 398 Commodity forwards 443 – – 443 3 – – 3 Commodity options 27 – – 27 23 – – 23 Inflation-linked swaps 1 009 – – 1 009 623 – – 623 Finance lease receivables 18 – – 89 89 – – 92 92 Trade and other receivables 20 – 63 741 – 63 741 – 55 929 – 55 929 Treasury investments 21 – 22 108 – 22 108 – 2 638 – 2 638 Cash and cash equivalents 22 – 123 894 – 123 894 – 62 757 – 62 757 Bank balances – 80 752 – 80 752 – 30 680 – 30 680 Fixed deposits – 43 142 – 43 142 – 32 077 – 32 077 4 879 228 503 6 592 239 974 7 807 160 725 11 652 180 184 Financial liabilities Debt securities and borrowings 25 – 368 789 – 368 789 – 398 674 – 398 674 Eskom bonds – 180 126 – 180 126 – 175 167 – 175 167 Eurorand zero coupon bonds – 10 242 – 10 242 – 9 077 – 9 077 Foreign bonds – 36 789 – 36 789 – 39 419 – 39 419 Development financing institutions – 117 249 – 117 249 – 133 562 – 133 562 Export credit facilities – 15 997 – 15 997 – 20 063 – 20 063 Other loans – 8 386 – 8 386 – 21 386 – 21 386 Derivatives held for risk management 17 2 866 – 2 066 4 932 1 270 – 395 1 665 Foreign exchange contracts 393 – 98 491 365 – 77 442 Cross-currency swaps 2 398 – 1 968 4 366 802 – 318 1 120 Commodity forwards 55 – – 55 80 – – 80 Commodity options 4 – – 4 6 – – 6 Credit default swaps 11 – – 11 17 – – 17 Inflation-linked swaps 5 – – 5 – – – – Lease liabilities 29 – – 1 090 1 090 – – 1 111 1 111 Trade and other payables2 30 – 71 885 – 71 885 – 67 829 – 67 829 2 866 440 674 3 156 446 696 1 270 466 503 1 506 469 279 6.2 Fair value Valuation processes The group has a control framework in place for the measurement of fair values. It includes a valuation team (supported by external specialists) that ultimately reports to the chief financial officer and has overall responsibility for all significant fair value measurements. The valuation team regularly reviews significant unobservable inputs and valuation adjustments. Where third-party information, such as broker quotes or pricing services, is used to measure fair value, this information is assessed as to whether it provides adequate support for the accounting treatment applied including the level of the fair value hierarchy assigned to it. Principal markets The group is involved in various principal markets because of the unique funding activities undertaken where the fair value is determined by each participant in the different principal markets. The principal markets include: • capital and money markets • development financing institutions • export credit agencies 1. Other includes derivatives held for risk management designated as cash flow hedges measured at fair value through other comprehensive income and finance leases in terms of IFRS 16 Leases measured at amortised cost. The total assets measured at amortised cost amounted to R228 592 million (2025: R160 817 million) and the total liabilities measured at amortised cost amounted to R441 764 million (2025: R467 614 million). 2. Restated. Refer to note 49. 71 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 6. Accounting classification and fair value (continued) 6.2 Fair value (continued) Fair value hierarchy Fair value measurements are categorised into the different levels in the fair value hierarchy based on the inputs to the valuation techniques used. There were no changes in the valuation techniques applied. The hierarchy levels are defined as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices included within level 1 that are observable, either directly (ie as prices) or indirectly (ie derived from prices). Level 3: Unobservable inputs. There were no transfers between level 1, 2 or 3 of the fair value hierarchy during the year. The group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfers have occurred. The group’s policy for determining when transfers between levels in the hierarchy have occurred includes monitoring of the following factors: • changes in market and trading activity (eg significant increases/decreases in activity) • changes in inputs used in valuation techniques (eg inputs becoming/ceasing to be observable in the market) Valuation techniques Financial instrument Valuation technique Level 1: Quoted prices (unadjusted) in active markets Insurance investments (listed shares) Quoted bid price in active markets. A market is regarded as active when it is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Inputs other than quoted prices included within level 1 that are observable Loans receivable (excluding municipal payment A discounted cash flow technique is used which uses expected cash flows and a market-related arrangements and EFC), treasury investments, discount rate. insurance investments (excluding listed shares) and debt securities and borrowings Derivatives held for risk management Valuation determined with reference to broker quotes as well as use of discounted cash flow and option pricing models. Broker quotes are tested for reasonableness by discounting expected future cash flows using a market interest rate for a similar instrument at the measurement date. Valuations of cross-currency swaps include the credit risk of Eskom (known as debit value adjustment) and counterparties (known as credit value adjustment) where appropriate. A stochastic modelling approach is followed where the expected future exposure to credit risk for Eskom and its counterparties (considering default probabilities and recovery rates derived from market data) is modelled. Trade and other payables and cash and cash Fair values have not been disclosed for financial instruments where the carrying amounts are a equivalents reasonable approximation of fair value. Level 3: Unobservable inputs Embedded derivatives Fair value determined using unobservable inputs. Refer to note 16 for a movement reconciliation and to note 4.1 for information regarding the valuation techniques and assumptions used. Loans receivable (EFC home and other loans Fair value determined using unobservable inputs. The fair value of EFC home loans, EFC other loans and municipal payment arrangements) and municipal payment arrangements are based on discounted cash flows using market related discount rates. Trade and other receivables Fair value determined using unobservable inputs. The carrying value is equal to the fair value due to the expected short-term maturity of the trade receivables. The fair value for long-term receivables is based on discounted cash flows using the effective interest rate method. The carrying value approximates the fair value as the interest rates are market related and no additional disclosure is required. 72 The fair value hierarchy of financial instruments is as follows: 2026 2025 Measured Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 at fair value Rm Rm Rm Rm Rm Rm Group Financial assets Loans receivable – 37 11 342 – 29 1 864 Home loans No – – 6 880 – – – Municipal payment arrangements1 No – – 3 885 – – 1 864 Other loans No – 37 577 – 29 – Embedded derivatives Yes – – 1 524 – – 3 972 Derivatives held for risk management – 9 764 – – 15 345 – Foreign exchange contracts Yes – 416 – – 298 – Cross-currency swaps Yes – 7 869 – – 14 398 – Commodity forwards Yes – 443 – – 3 – Commodity options Yes – 27 – – 23 – Inflation-linked swaps Yes – 1 009 – – 623 – Treasury investments No – 22 243 – – 2 646 – Insurance investments 2 483 25 890 – 1 869 20 567 – Fixed deposits and negotiable certificates of deposit No – 18 977 – – 17 153 – Floating rate notes No – 2 925 – – 2 901 – Inflation-linked bonds No – 1 623 – – 513 – Listed shares Yes 2 483 – – 1 869 – – Other bonds No – 2 365 – – – – Assets held-for-sale – – – – – 7 233 Home loans No – – – – – 6 725 Other loans No – – – – – 508 Financial liabilities Debt securities and borrowings – 351 578 – – 358 836 – Eskom bonds No – 168 032 – – 154 673 – Commercial paper No – 480 – – – – Eurorand zero coupon bonds No – 9 930 – – 7 788 – Foreign bonds No – 38 009 – – 42 751 – Development financing institutions No – 117 428 – – 131 570 – Export credit facilities No – 17 143 – – 21 477 – Other loans No – 556 – – 577 – Derivatives held for risk management – 4 853 – – 1 647 – Foreign exchange contracts Yes – 412 – – 424 – Cross-currency swaps Yes – 4 366 – – 1 120 – Commodity forwards Yes – 55 – – 80 – Commodity options Yes – 4 – – 6 – Credit default swaps Yes – 11 – – 17 – Inflation-linked swaps Yes – 5 – – – – 1. Municipal payment arrangements were restated and represented under level 3 for 2025 instead of level 2 as previously erroneously reported. This correction did not affect the disclosed fair value. 73 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 6. Accounting classification and fair value (continued) 6.2 Fair value (continued) Fair value hierarchy (continued) 2026 2025 Measured Level 1 Level 2 Level 3 Level 1 Level 2 Level 3 at fair value Rm Rm Rm Rm Rm Rm Company Financial assets Loans receivable – 15 517 3 885 – 37 200 1 864 Loans to subsidiaries 1 No – 15 517 – – 37 200 – Municipal payment arrangements2 No – – 3 885 – – 1 864 Embedded derivatives Yes – – 1 524 – – 3 972 Derivatives held for risk management – 9 858 – – 15 395 – Foreign exchange contracts Yes – 510 – – 348 – Cross-currency swaps Yes – 7 869 – – 14 398 – Commodity forwards Yes – 443 – – 3 – Commodity options Yes – 27 – – 23 – Inflation-linked swaps Yes – 1 009 – – 623 – Treasury investments No – 22 243 – – 2 646 – Financial liabilities Debt securities and borrowings – 364 174 – – 384 839 – Eskom bonds No – 173 264 – – 159 831 – Eurorand zero coupon bonds No – 9 930 – – 7 788 – Foreign bonds No – 38 009 – – 42 751 – Development financing institutions No – 117 428 – – 131 570 – Export credit facilities No – 17 143 – – 21 477 – Other loans No – 8 400 – – 21 422 – Derivatives held for risk management – 4 932 – – 1 665 – Foreign exchange contracts Yes – 491 – – 442 – Cross-currency swaps Yes – 4 366 – – 1 120 – Commodity forwards Yes – 55 – – 80 – Commodity options Yes – 4 – – 6 – Credit default swaps Yes – 11 – – 17 – Inflation-linked swaps Yes – 5 – – – – 1. The values are based on the assumption that there are no changes in the manner of recovery of the loans. It is assumed that the outstanding amount on the loan to: – EFC would be recovered based on the collections from the underlying loans and advances in EFC in the normal course of business. – ERI would be recovered through refinancing or repayment of the loan by 31 October 2027. – NTCSA would be recovered through the underlying cost of servicing the debt incurred to fund NTCSA in the normal course of business. 2. Municipal payment arrangements were restated and represented under level 3 for 2025 instead of level 2 as previously erroneously reported. This correction did not affect the disclosed fair value. 74 7. Segment information The operations of the group consist mainly of generation, distribution and transmission activities through Eskom and NTCSA. Operating segments Management identified the reportable segments based on the reports regularly provided, reviewed and used by Exco who serves as the chief operating decision maker. Exco makes strategic decisions and assessed the performance of the operating segments based on a measure of profit or loss, significant assets and liabilities as well as key financial ratios and operational performance indicators. The amounts provided to Exco with respect to total assets and liabilities were measured in terms of IFRS Accounting Standards. These assets and liabilities were allocated based on the operation of the segment. The operations of the reportable segments are as follows: Segment Operations Generation Consists of generation, primary energy and group capital functions that respectively: • procures primary energy • manages capacity and generates electricity for sale to transmission • plans, develops, executes and monitors generation-related capital projects Transmission Consists of transmission network, system operator, market operator and central purchasing agent functions which respectively: (NTCSA) • manages, maintains and operates the transmission grid, implement infrastructure plans and provides access to the transmission grid to ensure reliable transmission grid services for transmitting electricity to generators and customers through the transmitter • manage real-time system operations • facilitate electricity market operations • operates the electricity trading system, including purchase of electricity from generation and IPPs, sale of electricity to distribution across six transmission grids as well as the purchase and sale of bulk electricity with international customers Distribution Consists of five operating clusters across nine provinces who provides, operates and maintains the distribution network for distributing electricity and the sale of electricity to local large (including municipalities) and small power users (including prepaid residential customers). All other Relates to operating segments which are below the quantitative thresholds for determining a reportable segment in terms of segments IFRS 8 Operating Segments which includes the group’s subsidiaries as well as all service and strategic functions (corporate entities) which do not qualify as a reportable segment in terms of IFRS 8. Electricity is sold by distribution to external customers in terms of contractual agreements based on the NERSA approved regulated tariffs and accounted for as external revenue in terms of the principal revenue generating activities of the group referred to in note 2.19. Electricity is also sold to international customers through the international trader and accounted for as external revenue in terms of the principal revenue generating activities of the group. Inter-segment transactions Inter-segment transactions are based on contractual agreements between segments, including between the generation, transmission and distribution segments for the sale and purchase of electricity. Energy related sales and recoveries Inter-segment energy related revenue and recoveries (achieved through transfer pricing) for the flow of electricity from generator to consumer are derived from the revenue in the approved corporate plan which is based on cost recovery plus a return on assets informed by the regulatory methodology principles and revenue determinations, and adjusted in line with regulatory records of decision, RCA and court decisions. Transfer pricing between the segments is adjusted in future periods as a recovery or reduction to account for differences between actual and estimated information. The services and related charges between segments for the sale and purchase of electricity are as follows: Generation Electricity generated is sold to transmission based on a tariff (reflective of the generating costs) consisting of a fixed capacity and a variable energy component as well as a charge for ancillary services to assist the transmission system operator to maintain grid stability in line with the Grid Code. The charges are recognised as follows: • fixed capacity charge over time as capacity is made available to the customer • variable energy charge at a point in time as electricity is delivered and consumed Transmission (NTCSA) The Grid Code sets out the objectives of transmission pricing and the allocation of costs between generators and load customers, including charges for network related services. Transmission incurs additional energy costs (energy purchases from IPPs and import of energy). Electricity is sold to distribution at a tariff that allows for the recovery of costs and return on assets consisting of a fixed capacity and a variable energy component where the ratio between fixed and variable costs is aligned with the regulated tariffs charged to external customers. Transmission also charges generation and distribution their portion of transmission network and related costs (equal recovery of network losses, network access charges and ancillary services from generators and load customers recovered via distribution from external customers). The charges are recognised as follows: • network charges over time for services • fixed capacity charge over time as capacity is made available to the customer • variable energy charge at a point in time as electricity is delivered and consumed Distribution Distribution procures electricity from the transmission central purchasing agent (fixed capacity and variable energy charge) and incurs transmission network operator services (network losses, network access and ancillary (reliability) charges). 75 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 7. Segment information (continued) Inter-segment transactions (continued) Other All direct corporate service costs were charged to the relevant segments based on service consumption. An appropriate cost driver apportionment was used to split the remaining overhead costs on a fair basis between segments. Net finance costs, net fair value and foreign exchange gains/(losses) were allocated to segments based on segment funding requirements. The segment information provided to Exco for the reportable segments is as follows: Generation Transmission Distribution All other Reallocation Group segments and inter- segment transactions Rm Rm Rm Rm Rm Rm 2026 External revenue – 18 799 335 965 951 (991) 354 724 Inter-segment revenue/recoveries 248 894 57 027 (305 821) 19 353 (19 453) – Total revenue 248 894 75 826 30 144 20 304 (20 444) 354 724 Other income 342 231 970 3 738 (3 998) 1 283 Primary energy (103 062) (48 814) (16) (4) – (151 896) Employee benefit expense (18 140) (5 043) (15 908) (8 969) – (48 060) Reversal of impairment/(impairment) of financial assets 54 575 (103) 85 (892) (281) (Impairment)/reversal of impairment and write down of other assets (252) (1) (589) – 6 (836) Other expenses (41 961) (3 034) (14 270) (11 185) 24 164 (46 286) Profit/(loss) before depreciation and amortisation expense as well as net fair value, foreign exchange (loss)/gain and deferred income amortisation (EBITDA) 85 875 19 740 228 3 969 (1 164) 108 648 Depreciation and amortisation expense (28 570) (2 780) (4 666) (478) 159 (36 335) Net fair value, foreign exchange (loss)/gain and deferred income amortisation (1 357) (170) 106 295 – (1 126) Profit/(loss) before net finance (cost)/income and share of profit of equity-accounted investees 55 948 16 790 (4 332) 3 786 (1 005) 71 187 Net finance (cost)/income (32 598) 812 (2 515) 2 133 282 (31 886) Finance income 16 2 897 665 10 656 (5 787) 8 447 Finance cost (32 614) (2 085) (3 180) (8 523) 6 069 (40 333) Share of profit of equity-accounted investees after tax – – – 100 – 100 Profit/(loss) before tax 23 350 17 602 (6 847) 6 019 (723) 39 401 Income tax – (4 398) – (4 507) (151) (9 056) Profit/(loss) for the year 23 350 13 204 (6 847) 1 512 (874) 30 345 Other information Segment assets 598 885 140 219 150 511 259 500 (127 561) 1 021 554 Investment in equity-accounted investees – – – 302 – 302 Total assets 598 885 140 219 150 511 259 802 (127 561) 1 021 856 Total liabilities 94 201 79 625 97 550 496 7741 (107 210) 660 940 Additions and transfers to property, plant and equipment and intangible assets 30 393 8 197 8 787 915 (189) 48 103 1. Represents the external debt and borrowings that are accounted for in the treasury segment. 76 Generation Transmission Distribution All other Reallocation Group segments and inter- segment transactions Rm Rm Rm Rm Rm Rm 2025 External revenue – 21 202 319 701 1 408 (1 416) 340 895 Inter-segment revenue/recoveries 207 117 73 687 (280 788) 16 860 (16 876) – Total revenue 207 117 94 889 38 913 18 268 (18 292) 340 895 Other income 738 675 2 371 2 326 (2 845) 3 265 Primary energy (98 008) (52 185) (14) – – (150 207) Employee benefit expense (16 631) (4 530) (14 359) (7 640) – (43 160) (Impairment)/reversal of impairment of financial assets (284) (527) (7 330) (8) 832 (7 317) Reversal of impairment/(impairment) and write down of other assets 174 (4) (468) (180) 179 (299) Other expenses1 (38 295) (1 421) (13 302) (12 193) 20 046 (45 165) Profit/(loss) before depreciation and amortisation expense as well as net fair value, foreign exchange gain/(loss) and deferred income amortisation 54 811 36 897 5 811 580 (87) 98 012 Depreciation and amortisation expense (24 564) (2 629) (4 421) (377) 227 (31 764) Net fair value, foreign exchange gain/(loss) and deferred income amortisation (2 945) (175) (6 176) (1 116) (3) (10 415) Profit/(loss) before net finance (cost)/income and share of profit of equity-accounted investees 27 302 34 093 (4 786) (913) 137 55 833 Net finance (cost)/income (32 839) (1 121) (1 581) 1 315 154 (34 072) Finance income 122 1 706 1 553 8 760 (5 301) 6 840 Finance cost1 (32 961) (2 827) (3 134) (7 445) 5 455 (40 912) Share of profit of equity-accounted investees after tax – – – 102 – 102 (Loss)/profit before tax (5 537) 32 972 (6 367) 504 291 21 863 Income tax – (5 761) – (1 363) (698) (7 822) (Loss)/profit for the year1 (5 537) 27 211 (6 367) (859) (407) 14 041 Other information Segment assets 583 251 137 871 143 596 188 111 (149 155) 903 674 Investment in equity-accounted investees – – – 346 – 346 Assets held-for-sale – – – 7 811 – 7 811 Total assets 583 251 137 871 143 596 196 268 (149 155) 911 831 Total liabilities1 90 195 94 617 89 135 495 2482 (133 703) 635 492 Additions and transfers to property, plant and equipment and intangible assets 27 156 6 357 6 908 1 107 (114) 41 414 Group Revenue Non-current assets 2026 2025 2026 2025 Geographical information Rm Rm Rm Rm South Africa 335 519 319 285 721 518 699 270 Foreign countries 19 205 21 610 – – 354 724 340 895 721 518 699 270 The group’s reportable segments operate mainly in South Africa, which is Eskom’s country of domicile. Revenue is allocated based on the country in which the customer is located after eliminating inter-segment transactions. There is no significant revenue derived from a single external customer by any of the reportable segments. Non-current assets disclosed for geographical information comprise non-current assets other than deferred tax assets, inventories and financial instruments. 1. Restated. Refer to note 49. 2. Represents the external debt and borrowings that are accounted for in the treasury segment. 77 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 8. Property, plant and equipment Land, Plant Equipment Assets Total buildings Generating Transmitting Distributing Spares and under and and vehicles construction facilities other Note Rm Rm Rm Rm Rm Rm Rm Rm 2026 Group Carrying value at beginning of the year 8 790 405 991 49 692 80 953 19 305 6 076 115 179 685 986 Cost 12 041 620 980 79 412 158 594 21 172 20 104 115 179 1 027 482 Accumulated depreciation and impairment losses (3 251) (214 989) (29 720) (77 641) (1 867) (14 028) – (341 496) Additions and transfers 278 2 697 1 070 223 2 816 1 787 38 848 47 719 Transfers of assets from customers – – 2 556 1 524 – – – 4 080 Commissioning of assets constructed 196 72 807 4 607 5 844 50 284 (83 788) – Basis adjustment – cash flow hedge reserve – – – – – – (94) (94) Finance cost capitalised 41 – – – – – – 4 555 4 555 Provisions capitalised 28 – 1 795 – – – – (958) 837 Disposals and write-offs (128) (542) (32) (602) (42) (73) (576) (1 995) Depreciation (118) (28 747) (1 904) (6 230) (85) (1 152) – (38 236) Carrying value at end of the year 9 018 454 001 55 989 81 712 22 044 6 922 73 166 702 852 Cost 12 281 694 742 87 562 165 263 23 961 21 126 73 166 1 078 101 Accumulated depreciation and impairment losses (3 263) (240 741) (31 573) (83 551) (1 917) (14 204) – (375 249) Company Carrying value at beginning of the year 6 776 405 079 – 81 160 16 186 3 943 89 614 602 758 Cost 9 602 615 698 – 158 975 17 150 14 303 89 614 905 342 Accumulated depreciation and impairment losses (2 826) (210 619) – (77 815) (964) (10 360) – (302 584) Additions and transfers 229 2 697 – 224 2 376 1 281 32 858 39 665 Transfers of assets from customers – – – 1 524 – – – 1 524 Commissioning of assets constructed 197 72 977 – 5 851 2 284 (79 311) – Basis adjustment – cash flow hedge reserve – – – – – – (94) (94) Finance cost capitalised 41 – – – – – – 2 729 2 729 Provisions capitalised 28 – 1 795 – – – – (945) 850 Disposals and write-offs (123) (542) – (602) (30) (61) (488) (1 846) Depreciation (79) (28 319) – (6 247) (24) (688) – (35 357) Carrying value at end of the year 7 000 453 687 – 81 910 18 510 4 759 44 363 610 229 Cost 9 823 689 565 – 165 651 19 494 15 041 44 363 943 937 Accumulated depreciation and impairment losses (2 823) (235 878) – (83 741) (984) (10 282) – (333 708) 78 Land, Plant Equipment Work Total buildings Generating Transmitting Distributing Spares and under and and vehicles construction facilities other Note Rm Rm Rm Rm Rm Rm Rm Rm 2025 Group Carrying value at beginning of the year 8 684 375 081 50 619 77 550 18 262 4 385 146 369 680 950 Cost 11 897 568 199 78 705 149 415 20 162 18 273 146 369 993 020 Accumulated depreciation and impairment losses (3 213) (193 118) (28 086) (71 865) (1 900) (13 888) – (312 070) Additions and transfers 43 2 214 504 393 1 325 2 435 34 343 41 257 Transfers of assets from customers – – 81 1 013 – – – 1 094 Commissioning of assets constructed 242 61 613 635 8 132 47 138 (70 807) – Basis adjustment – cash flow hedge reserve – – – – – – (74) (74) Finance cost capitalised 41 – – – – – – 6 147 6 147 Provisions capitalised 28 – (7 140) – – – – 1 090 (6 050) Disposals and write-offs (53) (960) (362) (166) (243) (61) (1 889) (3 734) Depreciation (126) (24 817) (1 785) (5 969) (86) (821) – (33 604) Carrying value at end of the year 8 790 405 991 49 692 80 953 19 305 6 076 115 179 685 986 Cost 12 041 620 980 79 412 158 594 21 172 20 104 115 179 1 027 482 Accumulated depreciation and impairment losses (3 251) (214 989) (29 720) (77 641) (1 867) (14 028) – (341 496) Company Carrying value at beginning of the year 6 735 373 481 – 77 768 15 118 2 643 127 348 603 093 Cost 9 540 562 717 – 149 792 16 050 13 097 127 348 878 544 Accumulated depreciation and impairment losses (2 805) (189 236) – (72 024) (932) (10 454) – (275 451) Additions and transfers 1 2 213 – 393 1 287 1 733 28 942 34 569 Transfers of assets from customers – – – 1 013 – – – 1 013 Commissioning of assets constructed 183 61 880 – 8 138 – 135 (70 336) – Basis adjustment – cash flow hedge reserve – – – – – – (74) (74) Finance cost capitalised 41 – – – – – – 4 340 4 340 Provisions capitalised 28 – (7 140) – – – – 1 090 (6 050) Disposals and write-offs (50) (960) – (166) (194) (46) (1 696) (3 112) Depreciation (93) (24 395) – (5 986) (25) (522) – (31 021) Carrying value at end of the year 6 776 405 079 – 81 160 16 186 3 943 89 614 602 758 Cost 9 602 615 698 – 158 975 17 150 14 303 89 614 905 342 Accumulated depreciation and impairment losses (2 826) (210 619) – (77 815) (964) (10 360) – (302 584) The ongoing internal and external investigations, including those conducted by the Special Investigating Unit (SIU), into allegations of contract-related corruption are continuing. There is a possibility of future write-offs as investigations are in progress. Once the investigations have advanced to a stage where the outcome can be determined with reasonable certainty, the related accounting impact will be assessed and recognised accordingly. Refer to note 2.4. 79 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 8. Property, plant and equipment (continued) The total depreciation charge for property, plant and equipment is disclosed in profit or loss in the following categories: Group Company 2026 2025 2026 2025 Note Rm Rm Rm Rm Depreciation and amortisation expense 38 38 226 33 593 35 347 31 010 Primary energy 10 11 10 11 38 236 33 604 35 357 31 021 Average rates of finance cost capitalised to qualifying assets: Group and company 2026 2025 % % General borrowings 9.85 10.05 Specific borrowings 9.49 8.36 Property, plant and equipment includes the following right-of-use asset balances: Land, Plant Equipment Total buildings Generating Spares and and and other vehicles facilities Rm Rm Rm Rm Rm 2026 Group Carrying value at beginning of the year 47 4 589 50 124 4 810 Cost 122 10 600 505 206 11 433 Accumulated depreciation and impairment losses (75) (6 011) (455) (82) (6 623) Additions and transfers 173 – – 2 175 Disposals and write-offs – – – (5) (5) Depreciation (40) (668) (10) (100) (818) Carrying value at end of the year 180 3 921 40 21 4 162 Cost 253 10 601 506 160 11 520 Accumulated depreciation and impairment losses (73) (6 680) (466) (139) (7 358) Company Carrying value at beginning of the year 8 826 50 – 884 Cost 49 832 505 – 1 386 Accumulated depreciation and impairment losses (41) (6) (455) – (502) Additions and transfers 133 – – – 133 Depreciation (19) (16) (10) – (45) Carrying value at end of the year 122 810 40 – 972 Cost 151 832 506 – 1 489 Accumulated depreciation and impairment losses (29) (22) (466) – (517) 2025 Group Carrying value at beginning of the year 44 4 414 61 8 4 527 Cost 131 9 769 505 70 10 475 Accumulated depreciation and impairment losses (87) (5 355) (444) (62) (5 948) Additions 39 832 – 204 1 075 Disposals and write-offs (3) – – (8) (11) Depreciation (33) (657) (11) (80) (781) Carrying value at end of the year 47 4 589 50 124 4 810 Cost 122 10 600 505 206 11 433 Accumulated depreciation and impairment losses (75) (6 011) (455) (82) (6 623) Company Carrying value at beginning of the year 29 – 61 8 98 Cost 88 – 505 67 660 Accumulated depreciation and impairment losses (59) – (444) (59) (562) Additions – 832 – – 832 Disposals and write-offs (3) – – (8) (11) Depreciation (18) (6) (11) – (35) Carrying value at end of the year 8 826 50 – 884 Cost 49 832 505 – 1 386 Accumulated depreciation and impairment losses (41) (6) (455) – (502) 80 9. Intangible assets 2026 2025 Rights Computer Total Rights Computer Total software software Note Rm Rm Rm Rm Rm Rm Group Carrying value at beginning of the year 3 415 155 3 570 3 350 88 3 438 Cost 3 631 587 4 218 3 566 624 4 190 Accumulated amortisation and impairment losses (216) (432) (648) (216) (536) (752) Additions and transfers 299 85 384 65 92 157 Write-offs (16) (1) (17) – – – Amortisation 38 – (35) (35) – (25) (25) Carrying value at end of the year 3 698 204 3 902 3 415 155 3 570 Cost 3 912 411 4 323 3 631 587 4 218 Accumulated amortisation and impairment losses (214) (207) (421) (216) (432) (648) Company Carrying value at beginning of the year 748 142 890 732 84 816 Cost 823 254 1 077 805 288 1 093 Accumulated amortisation and impairment losses (75) (112) (187) (73) (204) (277) Additions and transfers 6 67 73 16 81 97 Write-offs (16) (1) (17) – – – Amortisation 38 – (32) (32) – (23) (23) Carrying value at end of the year 738 176 914 748 142 890 Cost 811 306 1 117 823 254 1 077 Accumulated amortisation and impairment losses (73) (130) (203) (75) (112) (187) 10. Future fuel supplies Group and company 2026 2025 Coal Nuclear Total Coal Nuclear Total Note Rm Rm Rm Rm Rm Rm Carrying value at beginning of the year 7 637 2 7 639 5 764 1 018 6 782 Additions 1 653 1 306 2 959 1 784 1 604 3 388 Provisions capitalised/(reversed) 28 358 – 358 (234) – (234) Basis adjustment – cash flow hedge reserve – – – – (119) (119) Transfer (to)/from inventories 13 (623) – (623) 323 (2 501) (2 178) Carrying value at end of the year 9 025 1 308 10 333 7 637 2 7 639 11. Investment in equity-accounted investees Group Company 2026 2025 2026 2025 Rm Rm Rm Rm Balance at beginning of the year 346 346 95 95 Share of profit after tax 100 102 – – Dividends received (144) (102) – – Balance at end of the year 302 346 95 95 The group’s investments in joint ventures and associates are not individually material. The group’s share of the results of its joint ventures and associates, all of which are unlisted, is as follows: Group Company 2026 2025 2026 2025 Name Main Country of Interest Share of Share Investment Investment business incorporation held profit/(loss) of profit at cost at cost after tax after tax for the year for the year % Rm Rm Rm Rm Directly held Motraco – Mozambique Transmission Electricity Company SARL transmission Mozambique 33 107 101 95 95 Indirectly held Trans Africa Projects (Pty) Ltd Engineering services South Africa 50 (7) 1 100 102 The share capital of the group’s investment in joint ventures comprises ordinary shares. The joint ventures are structured as separate vehicles and the group has a residual interest in the net assets. The relevant activities are jointly controlled in accordance with the agreements under which the entities are established. The joint arrangements have therefore been classified as joint ventures. 81 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 12. Investment in subsidiaries 2026 2025 Name Main business Interest Interest held held % % Directly held Escap SOC Ltd Insurance 100 100 Eskom Development Foundation NPC Corporate social responsibility 100 100 Eskom Enterprises SOC Ltd Non-regulated electricity supply industry activities in 100 100 South Africa and electricity supply and related services outside South Africa Eskom Finance Company SOC Ltd Finance (employee housing loans) 100 100 National Electricity Distribution Company of Distribution of electricity – not trading 100 100 South Africa SOC Ltd National Transmission Company South Africa SOC Ltd Transmission and trading of electricity 100 100 Indirectly held Eskom Rotek Industries SOC Ltd Construction and abnormal load transportation 100 100 Eskom Uganda Ltd1 Operations management – not trading 100 100 Golang Coal SOC Ltd Coal exports 67 67 Nqaba Finance 1 (RF) Ltd Residential backed mortgage securities 100 100 Pebble Bed Modular Reactor SOC Ltd2 Reactor-driven generation project – not trading 100 100 South Dunes Coal Terminal Company SOC Ltd Coal exports 69 69 2026 2025 Investment Investment at cost at cost Rm Rm Escap SOC Ltd 380 380 Eskom Development Foundation NPC – – Eskom Enterprises SOC Ltd –3 –3 Eskom Finance Company SOC Ltd – 3 –3 National Electricity Distribution Company of South Africa SOC Ltd –3 –3 National Transmission Company South Africa SOC Ltd4 30 504 26 331 30 884 26 711 Other 346 346 31 230 27 057 All subsidiaries continue to be accounted for as previously assessed as there has not been any change in the outcome of the control assessment. The group does not have any subsidiaries with a material non-controlling interest. All subsidiaries were incorporated in South Africa with the exception of Eskom Uganda Ltd which was incorporated in Uganda. 13. Inventories 2026 2025 Coal and Nuclear Maintenance Total Coal and Nuclear Maintenance Total liquid fuel fuel spares and liquid fuel fuel spares and consumables consumables Note Rm Rm Rm Rm Rm Rm Rm Rm Group Carrying value at beginning of the year 22 472 4 588 19 397 46 457 21 493 2 594 17 503 41 590 Changes in working capital 5 776 (835) 1 744 6 685 1 057 (582) 1 800 2 275 Transfer from future fuel supplies 10 623 – – 623 (323) 2 501 – 2 178 Provisions (reversed)/capitalised 28 (4) 84 – 80 245 75 – 320 Reversal of write down/(write down) 36 4 – (303) (299) – – 94 94 28 871 3 837 20 838 53 546 22 472 4 588 19 397 46 457 Maturity analysis 28 871 3 837 20 838 53 546 22 472 4 588 19 397 46 457 Non-current 16 278 – – 16 278 15 373 – – 15 373 Current 12 593 3 837 20 838 37 268 7 099 4 588 19 397 31 084 Company Carrying value at beginning of the year 22 472 4 588 18 998 46 058 21 493 2 594 17 182 41 269 Changes in working capital 5 776 (835) 1 715 6 656 1 057 (582) 1 717 2 192 Transfer from future fuel supplies 10 623 – – 623 (323) 2 501 – 2 178 Provisions (reversed)/capitalised 28 (4) 84 – 80 245 75 – 320 Reversal of write down/(write down) 36 4 – (308) (304) – – 99 99 28 871 3 837 20 405 53 113 22 472 4 588 18 998 46 058 Maturity analysis 28 871 3 837 20 405 53 113 22 472 4 588 18 998 46 058 Non-current 16 278 – – 16 278 15 373 – – 15 373 Current 12 593 3 837 20 405 36 835 7 099 4 588 18 998 30 685 Nuclear fuel of R2 881 million (2025: R3 784 million) will be recovered more than 12 months after the reporting date. 1. Eskom Uganda Ltd is in the process of unwinding after the service concession arrangement in Uganda ended on 31 March 2023. 2. Eskom is seeking to dispose PBMR and its subsidiaries to the South African Nuclear Energy Corporation SOC Ltd subject to governance and regulatory approvals. 3. Nominal. 4. The investment increased by R4.2 billion (2025: R4.1 billion) as a result of NTCSA portion of debt relief from government that was converted to equity. 82 14. Deferred tax Group Company Net (liabilities)/assets Assets Restated Restated 2026 2025 2026 2025 Note Rm Rm Rm Rm Reconciliation of movements in balances Balance at beginning of the year (11 382) (10 331) – – Recognised in profit or loss Raised temporary differences 42 (2 449) 605 (2 252) 1 273 Recognised in other comprehensive income Raised temporary differences 42 653 207 637 213 Assets and liabilities held-for-sale 23 11 (11) – – Non-recognition of deferred tax asset 42 1 611 (1 852) 1 615 (1 486) Balance at end of the year (11 556) (11 382) – – Comprising (11 556) (11 382) – – Property, plant and equipment (127 279) (121 747) (112 498) (108 601) Revenue not recognised 21 856 16 385 21 856 16 385 Tax losses 79 804 89 428 79 386 89 018 Derecognition of deferred tax asset (36 887) (38 498) (36 517) (38 132) Trade and other receivables 18 516 15 960 18 516 16 211 Payments made in advance (153) (235) (153) (235) Loans receivable 1 539 1 391 1 539 1 391 Insurance investments (136) (63) – – Derivatives held for risk management 439 236 439 236 Embedded derivatives 1 039 1 049 1 039 1 049 Provisions 15 577 13 199 15 008 13 002 Employee benefit obligations 8 598 7 275 7 733 6 572 Payments received in advance 5 531 4 238 3 652 3 104 The total net (liabilities)/assets for the group consists of assets of R21 million (2025: R7 million) and liabilities of R11 577 million (2025: R11 389 million). The group has R295 570 million (2025: R331 215 million) and the company has R294 022 million (2025: R329 696 million) of unused tax losses available for offset against future taxable income. The tax losses do not expire. Eskom became profitable in 2026 and is projected to stay profitable as per the approved 2027 to 2031 corporate plan. This outlook is based on the following factors: • recovery in sales volumes supported by improved generation availability • approved tariff determinations broadly aligned to inflation and supported by regulatory adjustments • no material changes to Eskom’s underlying cost structure, with profitability improvements driven by operational efficiencies rather than structural cost reductions • cost discipline and an improved production mix reduce total costs relative to prior plans, notwithstanding continued primary energy cost inflation If an entity has a history of recent tax losses, it recognises a deferred tax asset from unused losses or credits in terms of IAS 12 Income Taxes only if there are enough taxable temporary differences or convincing evidence of sufficient future taxable profit to use those losses or credits. The following factors and possible uncertainties have been considered in the assessment of sufficient future taxable income over the foreseeable future (2027 to 2031) of Eskom: • electricity price (tariff ) path which will be impacted by future MYPD applications and approvals effecting the future profitability of the company • favourable court rulings relating to tariff determinations which will impact the future profitability of the company • deterioration in global market conditions in the ferrochrome industry and the impact on major ferrochrome producers in South Africa • sustaining the current level of generation plant performance and implementation of action plans to address other operational challenges • decline in sales volumes and the potential impact of customers moving to alternative energy sources which could adversely affect future profitability of the group and company • sales volumes linked to smelters are expected to be retained through special pricing mechanisms • growing trend of non-payment by municipalities will increase the revenue not recognised impacting the future profitability of the company • legal separation of the distribution business Management determined that although the company returned to profitability and paid income tax in 2026, the recent history of losses remains significant objective evidence that future taxable profits may not be available. Considering the uncertainty inherent in the projected taxable profits and the key assumptions underpinning those projections, management concluded that there is insufficient convincing evidence to support the recognition of a deferred tax asset in respect of the assessed losses. The deferred tax asset relating to the unused tax losses should only be recognised to the extent of available taxable temporary differences at 31 March 2026. Accordingly, the group has not recognised the deferred tax asset of R36 887 million arising from unused tax losses of R136 619 million and the company has not recognised the deferred tax asset of R36 517 million arising from unused tax losses of R135 248 million at 31 March 2026. SARS issued revised assessments relating to Eskom's income tax treatment of take-or-pay expenditure incurred during the 2020 to 2022 years of assessment. Management concluded, after considering the relevant facts, applicable legislation and external advice obtained, that its tax treatment remains supportable. The revised assessments primarily affect the quantum of assessed tax losses available for future utilisation. The matter remains unresolved and is subject to dispute resolution processes provided for under the Tax Administration Act, 28 of 2011. Management will continue to reassess the position as the matter progresses through the objection and appeal process. 83 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 15. Loans receivable 2026 2025 Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm Group Home loans 7 535 (465) 7 070 – – – Municipal payment arrangements 3 885 – 3 885 1 864 – 1 864 Other 531 (16) 515 28 – 28 11 951 (481) 11 470 1 892 – 1 892 Maturity analysis 11 951 (481) 11 470 1 892 – 1 892 Non-current 10 707 (472) 10 235 1 583 – 1 583 Current 1 244 (9) 1 235 309 – 309 Company Loans to subsidiaries 14 955 (80) 14 875 37 956 (419) 37 537 NTCSA term loan 8 880 (70) 8 810 31 929 (409) 31 520 EFC revolving credit facility 5 485 (5) 5 480 5 488 (3) 5 485 ERI term loan 590 (5) 585 539 (7) 532 Municipal payment arrangements 3 885 – 3 885 1 864 – 1 864 18 840 (80) 18 760 39 820 (419) 39 401 Maturity analysis 18 840 (80) 18 760 39 820 (419) 39 401 Non-current 16 259 (69) 16 190 32 328 (394) 31 934 Current 2 581 (11) 2 570 7 492 (25) 7 467 The loan to EFC has been classified as non-current as it is not expected that the loan would be settled within 12 months from the reporting date as the intention and practice has been to extend the loan facility to a future date upon maturity. Interest rates are linked to prevailing market rates. Refer to note 5.1.5 for details regarding the loans. 16. Embedded derivatives Group and company 2026 2025 Asset Asset Note Rm Rm Balance at beginning of the year 3 972 11 801 Day-one fair value recognised in deferred income 26 507 – Net fair value loss 39 (2 955) (7 829) Balance at end of the year 1 524 3 972 Maturity analysis 1 524 3 972 Non-current 1 246 3 847 Current 278 125 84 17. Derivatives held for risk management Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2026 Group Net (liability)/asset at beginning of the year (126) 13 278 (77) 17 (17) 623 13 698 Net fair value (loss)/gain (2 599) (8 795) 374 – 6 (18) (11 032) Recognised in profit or loss 39 (2 268) (8 164) 374 – 6 (18) (10 070) Recognised in other comprehensive income (331) (631) – – – – (962) Finance cost accrued – (2) – – – 399 397 Cash paid/(received) 2 729 (978) 91 6 – – 1 848 Net asset/(liability) at end of the year 4 3 503 388 23 (11) 1 004 4 911 Hedge exposure covered 4 3 503 388 23 (11) 1 004 4 911 Debt securities and borrowings 187 3 503 – – (11) 1 004 4 683 Other (183) – 388 23 – – 228 Assets Economic hedging 347 1 435 443 27 – 1 009 3 261 Cash flow hedging 69 6 434 – – – – 6 503 416 7 869 443 27 – 1 009 9 764 Maturity analysis 416 7 869 443 27 – 1 009 9 764 Non-current – 6 711 6 – – 983 7 700 Current 416 1 158 437 27 – 26 2 064 Liabilities Economic hedging 314 2 398 55 4 11 5 2 787 Cash flow hedging 98 1 968 – – – – 2 066 412 4 366 55 4 11 5 4 853 Maturity analysis 412 4 366 55 4 11 5 4 853 Non-current – 3 277 – – 11 – 3 288 Current 412 1 089 55 4 – 5 1 565 Notional amount per currency m m m m m m m EUR 266 410 – – – – 676 USD 736 4 942 – – – – 5 678 GBP 21 – – – – – 21 CNY – 9 446 – – – – 9 446 JPY 1 205 – – – – – 1 205 SEK 334 – – – – – 334 ZAR – – – – 191 3 777 3 968 Notional amount per commodity Unit Group and company Low sulphur gas oil kilo litres – – 69 700 8 300 – – 78 000 85 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 17. Derivatives held for risk management (continued) Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2026 Company Net (liability)/asset at beginning of the year (94) 13 278 (77) 17 (17) 623 13 730 Net fair value (loss)/gain (2 398) (8 795) 374 – 6 (18) (10 831) Recognised in profit or loss 39 (2 067) (8 164) 374 – 6 (18) (9 869) Recognised in other comprehensive income (331) (631) – – – – (962) Finance cost accrued – (2) – – – 399 397 Cash paid/(received) 2 511 (978) 91 6 – – 1 630 Net asset/(liability) at end of the year 19 3 503 388 23 (11) 1 004 4 926 Hedge exposure covered 19 3 503 388 23 (11) 1 004 4 926 Debt securities and borrowings 187 3 503 – – (11) 1 004 4 683 Other (168) – 388 23 – – 243 Assets Economic hedging 441 1 435 443 27 – 1 009 3 355 Cash flow hedging 69 6 434 – – – – 6 503 510 7 869 443 27 – 1 009 9 858 Maturity analysis 510 7 869 443 27 – 1 009 9 858 Non-current – 6 711 6 – – 983 7 700 Current 510 1 158 437 27 – 26 2 158 Liabilities Economic hedging 393 2 398 55 4 11 5 2 866 Cash flow hedging 98 1 968 – – – – 2 066 491 4 366 55 4 11 5 4 932 Maturity analysis 491 4 366 55 4 11 5 4 932 Non-current – 3 277 – – 11 – 3 288 Current 491 1 089 55 4 – 5 1 644 Notional amount per currency m m m m m m m EUR 246 410 – – – – 656 USD 576 4 942 – – – – 5 518 GBP 21 – – – – – 21 CNY – 9 446 – – – – 9 446 JPY 1 194 – – – – – 1 194 SEK 143 – – – – – 143 ZAR – – – – 191 3 777 3 968 86 Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2025 Group Net (liability)/asset at beginning of the year (98) 26 003 210 7 (27) 328 26 423 Net fair value (loss)/gain (4 190) (5 263) (478) 4 10 123 (9 794) Recognised in profit or loss 39 (3 894) (7 340) (478) 4 10 123 (11 575) Recognised in other comprehensive income (296) 2 077 – – – – 1 781 Transfers – – – (51) – – (51) Finance cost accrued – 102 – – – 172 274 Cash paid/(received) 4 162 (7 564) 191 57 – – (3 154) Net (liability)/asset at end of the year (126) 13 278 (77) 17 (17) 623 13 698 Hedge exposure covered (126) 13 278 (77) 17 (17) 623 13 698 Debt securities and borrowings (61) 13 278 – – (17) 623 13 823 Other (65) – (77) 17 – – (125) Assets Economic hedging 264 2 872 3 23 – 623 3 785 Cash flow hedging 34 11 526 – – – – 11 560 298 14 398 3 23 – 623 15 345 Maturity analysis 298 14 398 3 23 – 623 15 345 Non-current 2 12 834 – – – 484 13 320 Current 296 1 564 3 23 – 139 2 025 Liabilities Economic hedging 347 802 80 6 17 – 1 252 Cash flow hedging 77 318 – – – – 395 424 1 120 80 6 17 – 1 647 Maturity analysis 424 1 120 80 6 17 – 1 647 Non-current – 819 – – 17 – 836 Current 424 301 80 6 – – 811 Notional amount per currency m m m m m m m EUR 432 521 – – – – 953 USD 1 902 5 161 – – – – 7 063 GBP 25 – – – – – 25 CNY – 2 786 – – – – 2 786 JPY 641 – – – – – 641 SEK 185 – – – – – 185 ZAR – – – – 282 3 777 4 059 Notional amount per commodity Unit Group and company Low sulphur gas oil kilo litres – – 72 000 31 000 – – 103 000 87 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 17. Derivatives held for risk management (continued) Foreign Cross- Commodity Commodity Credit Inflation- Total exchange currency forwards options default linked contracts swaps swaps swaps Note Rm Rm Rm Rm Rm Rm Rm 2025 Company Net (liability)/asset at beginning of the year (71) 26 003 210 7 (27) 328 26 450 Net fair value (loss)/gain (4 005) (5 263) (478) 4 10 123 (9 609) Recognised in profit or loss 39 (3 709) (7 340) (478) 4 10 123 (11 390) Recognised in other comprehensive income (296) 2 077 - - - - 1 781 Transfers - - - (51) - - (51) Finance cost accrued - 102 - - - 172 274 Cash paid/(received) 3 982 (7 564) 191 57 - - (3 334) Net (liability)/asset at end of the year (94) 13 278 (77) 17 (17) 623 13 730 Hedge exposure covered (94) 13 278 (77) 17 (17) 623 13 730 Debt securities and borrowings (61) 13 278 - - (17) 623 13 823 Other (33) - (77) 17 - - (93) Assets Economic hedging 314 2 872 3 23 - 623 3 835 Cash flow hedging 34 11 526 - - - - 11 560 348 14 398 3 23 - 623 15 395 Maturity analysis 348 14 398 3 23 - 623 15 395 Non-current 2 12 834 - - - 484 13 320 Current 346 1 564 3 23 - 139 2 075 Liabilities Economic hedging 365 802 80 6 17 - 1 270 Cash flow hedging 77 318 - - - - 395 442 1 120 80 6 17 - 1 665 Maturity analysis 442 1 120 80 6 17 - 1 665 Non-current - 819 - - 17 - 836 Current 442 301 80 6 - - 829 Notional amount per currency m m m m m m m EUR 391 521 - - - - 912 USD 1 798 5 161 - - - - 6 959 GBP 25 - - - - - 25 CNY - 2 786 - - - - 2 786 JPY 641 - - - - - 641 SEK 153 - - - - - 153 ZAR - - - - 282 3 777 4 059 The hedging practices and accounting treatment are disclosed in note 2.10.3 in the accounting policies. The derivative instruments used to hedge the various financial risks are set out as follows: Derivative instrument Financial risk hedged Exposure Foreign exchange contracts Market (currency) Electricity generation, transmission and distribution activity purchases and loans denominated in foreign currencies Cross-currency swaps Market (currency and interest rate) Foreign fixed rate bonds and other foreign fixed or floating borrowings Commodity forwards and options Market (commodity) Liquid fuel purchases for electricity generation activities and base metal exposure relating to a component of plant, equipment or inventory Credit default swaps Credit Event of default by Eskom on debt securities and borrowings Inflation-linked swaps Market (interest rate) Finance cost that are dependent on current interest rates 88 Cash flow hedges Contractual cash flows are a function of foreign exchange and interest rates and are a point-in-time calculation that are impacted by market conditions at that time. This may result in future contractual cash outflows or inflows even though the fair value of the derivative may be reflected as an asset or liability. Group and company Carrying Un- 0–3 4–12 1–5 >5 years amount discounted months months years cash flows Rm Rm Rm Rm Rm Rm The periods in which the cash flows of derivatives designated as cash flow hedges are expected to occur are: 2026 Foreign exchange contracts Assets 69 73 23 50 - - Liabilities (98) (99) (92) (7) - - Cross-currency swaps Assets 6 434 9 227 32 70 7 820 1 305 Liabilities (1 968) (1 938) (211) (2 902) (174) 1 349 4 437 7 263 (248) (2 789) 7 646 2 654 2025 Foreign exchange contracts Assets 34 37 8 29 - - Liabilities (77) (74) (59) (15) - - Cross-currency swaps Assets 11 526 16 920 7 417 14 190 2 306 Liabilities (318) (1 605) (148) (1 482) (93) 118 11 165 15 278 (192) (1 051) 14 097 2 424 The periods in which the cash flows associated with derivatives are expected to impact profit or loss are: 2026 Foreign exchange contracts Assets 69 5 659 49 159 419 5 032 Liabilities (98) (99) (92) (7) - - Cross-currency swaps Assets 6 434 9 227 32 70 7 820 1 305 Liabilities (1 968) (1 938) (211) (2 902) (174) 1 349 4 437 12 849 (222) (2 680) 8 065 7 686 2025 Foreign exchange contracts Assets 34 5 559 29 114 442 4 974 Liabilities (77) (74) (59) (15) - - Cross-currency swaps Assets 11 526 16 920 7 417 14 190 2 306 Liabilities (318) (1 605) (148) (1 482) (93) 118 11 165 20 800 (171) (966) 14 539 7 398 Ineffective cash flow hedges The change in the fair value of the hedging instrument of R6 116 million (2025: R5 310 million) and for the hedged item (represented by a hypothetical derivative) of R6 492 million (2025: R6 520 million) were used to calculate hedge effectiveness. The cash flow hedge reserve is adjusted to the lower in absolute amounts of the cumulative gain or loss of the hedging instrument and hedged item from inception of each hedge. A loss of R303 million (2025: gain of R1 278 million) was recognised in profit or loss as ineffective during the year. Refer to note 39. Day-one (loss)/gain The group recognises a day-one (loss)/gain on initial recognition of cross-currency swaps held as hedging instruments where applicable. Group and company Cross- Inflation- Total currency linked swaps swaps Rm Rm Rm Loss at 31 March 2024 (1 403) (10) (1 413) Day-one gain/(loss) recognised 128 (79) 49 Amortised to profit or loss 230 16 246 Loss at 31 March 2025 (1 045) (73) (1 118) Day-one gain recognised 668 - 668 Amortised to profit or loss 61 26 87 Loss at 31 March 2026 (316) (47) (363) 89 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 18. Finance lease receivables 2026 2025 Gross Unearned Allowance Carrying Gross Unearned Allowance Carrying receivables finance for value receivables finance for value income impairment income impairment Rm Rm Rm Rm Rm Rm Rm Rm Group Non-current 126 (25) (1) 100 179 (39) (2) 138 Between one and five years 117 (23) (1) 93 153 (35) (2) 116 After five years 9 (2) – 7 26 (4) – 22 Current 54 (15) – 39 55 (19) – 36 180 (40) (1) 139 234 (58) (2) 174 Company Non-current 90 (19) (1) 70 117 (27) (1) 89 Between one and five years 81 (17) (1) 63 94 (24) (1) 69 After five years 9 (2) – 7 23 (3) – 20 Current 28 (9) – 19 14 (11) – 3 118 (28) (1) 89 131 (38) (1) 92 19. Payments made in advance 2026 2025 Securing Environ- Other Total Securing Environ- Other Total debt raised mental debt raised mental rehabili- rehabili- tation tation trust fund trust fund Rm Rm Rm Rm Rm Rm Rm Rm Group Balance at beginning of the year 261 1 454 1 123 2 838 653 1 316 1 237 3 206 Payments made 87 – 3 031 3 118 131 – 874 1 005 Recognised in profit or loss – 189 (691) (502) – 138 (723) (585) Transfers (104) – 15 (89) (523) – (265) (788) Balance at end of the year 244 1 643 3 478 5 365 261 1 454 1 123 2 838 Maturity analysis 244 1 643 3 478 5 365 261 1 454 1 123 2 838 Non-current 155 1 643 2 331 4 129 100 1 454 175 1 729 Current 89 – 1 147 1 236 161 – 948 1 109 Company Balance at beginning of the year 261 1 454 1 070 2 785 653 1 316 1 122 3 091 Payments made 87 – 999 1 086 131 – 812 943 Recognised in profit or loss – 189 (606) (417) – 138 (617) (479) Transfers (104) – (58) (162) (523) – (247) (770) Balance at end of the year 244 1 643 1 405 3 292 261 1 454 1 070 2 785 Maturity analysis 244 1 643 1 405 3 292 261 1 454 1 070 2 785 Non-current 155 1 643 235 2 033 100 1 454 263 1 817 Current 89 – 1 170 1 259 161 – 807 968 Other payments in advance mainly comprise payments made to build, maintain or purchase electricity infrastructure, strategic capital spares, critical maintenance production equipment, information technology infrastructure and other services. 90 20. Trade and other receivables 2026 2025 Receivable Amounts Allowance Carrying Receivable Amounts Allowance Carrying before not meeting for value before not meeting for value collectability collectability impairment collectability collectability impairment adjustments criteria adjustments criteria Rm Rm Rm Rm Rm Rm Rm Rm Group Financial instruments Trade receivables International 2 371 – (195) 2 176 3 165 – (530) 2 635 Local large power users 126 315 (91 632) (3 944) 30 739 109 565 (74 459) (5 977) 29 129 Municipalities 112 474 (91 632) (3 719) 17 123 95 771 (74 459) (5 387) 15 925 Other 13 841 – (225) 13 616 13 794 – (590) 13 204 Local small power users 5 367 (765) (1 515) 3 087 5 518 (1 055) (1 345) 3 118 134 053 (92 397) (5 654) 36 002 118 248 (75 514) (7 852) 34 882 Other receivables 3 106 – (668) 2 438 2 903 – (596) 2 307 137 159 (92 397) (6 322) 38 440 121 151 (75 514) (8 448) 37 189 Non-financial instruments 8 882 8 882 9 711 9 711 VAT 1 573 1 573 1 652 1 652 Diesel rebate 6 6 2 239 2 239 VAT on cash basis receivables 7 303 7 303 5 820 5 820 146 041 (92 397) (6 322) 47 322 130 862 (75 514) (8 448) 46 900 Maturity analysis 146 041 (92 397) (6 322) 47 322 130 862 (75 514) (8 448) 46 900 Non-current 6 498 – (62) 6 436 5 033 – (56) 4 977 Current 139 543 (92 397) (6 260) 40 886 125 829 (75 514) (8 392) 41 923 Company Financial instruments Trade receivables International 23 – – 23 13 – – 13 Local large power users 126 315 (91 632) (3 944) 30 739 109 565 (74 459) (5 977) 29 129 Municipalities 112 474 (91 632) (3 719) 17 123 95 771 (74 459) (5 387) 15 925 Other 13 841 – (225) 13 616 13 794 – (590) 13 204 Local small power users 5 366 (765) (1 514) 3 087 5 518 (1 055) (1 345) 3 118 131 704 (92 397) (5 458) 33 849 115 096 (75 514) (7 322) 32 260 Other receivables1 30 423 – (531) 29 892 24 251 – (582) 23 669 162 127 (92 397) (5 989) 63 741 139 347 (75 514) (7 904) 55 929 Non-financial instruments 7 309 7 309 8 059 8 059 Diesel rebate 6 6 2 239 2 239 VAT on cash basis receivables 7 303 7 303 5 820 5 820 169 436 (92 397) (5 989) 71 050 147 406 (75 514) (7 904) 63 988 Maturity analysis 169 436 (92 397) (5 989) 71 050 147 406 (75 514) (7 904) 63 988 Non-current 7 053 – (7) 7 046 5 522 – (13) 5 509 Current 162 383 (92 397) (5 982) 64 004 141 884 (75 514) (7 891) 58 479 Group and company 2026 2025 Note Rm Rm Reconciliation of movements in amounts not meeting collectability criteria Balance at beginning of the year 75 514 61 543 Revenue not meeting collectability criteria 32 30 112 23 797 Finance income not meeting collectability criteria 40 4 420 2 520 Cash basis revenue recognised 32 (14 269) (11 864) Write-offs (3 380) (482) Balance at end of the year 92 397 75 514 Refer to note 5.1.1 for a reconciliation of the movements in allowance for impairment. 91 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 21. Investments Portfolio Managed by Purpose Treasury Treasury division The purpose is to maintain ring-fenced funds over the remaining life of the Koeberg power station for nuclear decommissioning activities in accordance with the National Nuclear Regulator Act, 47 of 1999, and short-term fixed deposits for future debt and payment obligations. Insurance Escap To maintain adequate ring-fenced capital reserves to meet the statutory solvency requirements of the Insurance Act, 18 of 2017. 2026 2025 Gross Allowance Carrying Gross Allowance Carrying for value for value impairment impairment Rm Rm Rm Rm Rm Rm 21.1 Treasury investments Group and company Fixed deposits 22 240 (132) 22 108 2 649 (11) 2 638 Maturity analysis 22 240 (132) 22 108 2 649 (11) 2 638 Non-current 2 938 (8) 2 930 2 649 (11) 2 638 Current 19 302 (124) 19 178 – – – 21.2 Insurance investments Group Fixed deposits and negotiable certificates of deposit 18 985 (155) 18 830 17 124 (68) 17 056 Floating rate notes 2 891 (7) 2 884 2 896 (10) 2 886 Inflation-linked bonds 1 593 (3) 1 590 508 (1) 507 Listed shares 2 483 – 2 483 1 869 – 1 869 Other bonds 2 490 (4) 2 486 – – – 28 442 (169) 28 273 22 397 (79) 22 318 Maturity analysis 28 442 (169) 28 273 22 397 (79) 22 318 Non-current 6 974 (14) 6 960 3 404 (11) 3 393 Current 21 468 (155) 21 313 18 993 (68) 18 925 Group Total investments 50 682 (301) 50 381 25 046 (90) 24 956 Maturity analysis 50 682 (301) 50 381 25 046 (90) 24 956 Non-current 9 912 (22) 9 890 6 053 (22) 6 031 Current 40 770 (279) 40 491 18 993 (68) 18 925 22. Cash and cash equivalents Group Company 2026 2025 2026 2025 Rm Rm Rm Rm Bank balances 81 760 31 684 80 752 30 680 Fixed deposits 43 142 32 077 43 142 32 077 124 902 63 761 123 894 62 757 92 23. Assets and liabilities held-for-sale EFC was classified as held-for-sale in the prior financial year following the proposed disposal of the EFC loan book and interest in Nqaba (disposal group) to African Bank Limited. The disposal agreements were conditional upon the fulfilment of certain conditions precedent, with the deadline for compliance extended to 31 March 2026. Since certain conditions were not met by the deadline, the agreements have lapsed and the disposal will not proceed. The EFC disposal group therefore no longer met the criteria for classification as held-for-sale in terms of IFRS 5 at 31 March 2026 and was therefore included in the group results where applicable. Eskom Finance Company Rm 2025 Group Summarised statements of financial position Assets Loans receivable 7 761 Trade and other receivables 11 Deferred tax 11 Taxation 2 Cash and cash equivalents 26 7 811 Liabilities Debt securities and borrowings 606 24. Share capital Group and company 2026 2025 Shares Shares Authorised ordinary shares Balance at beginning of the year 500 000 000 000 300 000 000 000 Additional ordinary shares authorised – 200 000 000 000 Balance at end of the year 500 000 000 000 500 000 000 000 Issued Balance at beginning of the year 317 550 276 001 241 550 276 001 Share capital issued 64 000 000 000 76 000 000 000 Balance at end of the year 381 550 276 001 317 550 276 001 Unissued 118 449 723 999 182 449 723 999 The unissued share capital is under the control of the Government of the Republic of South Africa, represented by the Minister of Electricity and Energy, as the shareholder representative. Shares to the value of R64 billion were issued on 6 August 2025 consisting of R8 billion and R56 billion approved for conversion by the Minister of Finance on 21 October 2024 and 11 June 2025, respectively. 93 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 25. Debt securities and borrowings Group Company 2026 2025 2026 2025 Rm Rm Rm Rm Eskom bonds 174 895 169 992 180 126 175 167 Commercial paper 480 – – – Eurorand zero coupon bonds 10 242 9 077 10 242 9 077 Foreign bonds 36 789 39 419 36 789 39 419 Development financing institutions 117 249 133 562 117 249 133 562 Export credit facilities 15 997 20 063 15 997 20 063 Other loans 543 542 8 386 21 386 356 195 372 655 368 789 398 674 Maturity analysis 356 195 372 655 368 789 398 674 Non-current 296 294 351 226 296 294 356 204 Current 59 901 21 429 72 495 42 470 Group Company Currency Security Interest rate Nominal Maturity Carrying value Carrying value number date 2026 2025 2026 2025 2026 2025 2026 2025 % % m m Rm Rm Rm Rm Eskom bonds 174 895 169 992 180 126 175 167 ZAR ES26 1, 2 9.26 9.26 37 987 37 987 Apr 26 34 237 33 794 39 468 38 969 ZAR EL281 2.55 2.55 6 278 6 278 May 28 12 341 11 877 12 341 11 877 ZAR EL291 1.90 1.90 5 370 5 370 Nov 29 10 056 9 646 10 056 9 646 ZAR EL301 2.30 2.30 5 136 5 136 Jul 30 9 139 8 777 9 139 8 777 ZAR EL311 2.10 2.10 5 699 5 699 Jun 31 9 595 9 194 9 595 9 194 ZAR ECN32 2.95 2.95 5 000 5 000 Mar 32 8 141 7 858 8 141 7 858 ZAR ES331 9.21 9.21 34 542 34 542 Sep 33 31 547 31 271 31 547 31 271 ZAR EL361 2.25 2.25 5 594 5 594 Jan 36 8 821 8 455 8 821 8 455 ZAR EL371 2.25 2.25 23 725 23 725 Jan 37 31 878 30 051 31 878 30 051 ZAR ES421 10.39 10.39 21 437 21 437 Apr 42 19 140 19 069 19 140 19 069 Commercial paper 480 – – – ZAR n/a 8.94 – 150 – May 52 3 151 – – – ZAR n/a 9.45 – 24 – May 543 24 – – – ZAR n/a 9.53 – 302 – May 553 305 – – – Eurorand zero coupon bonds4 10 242 9 077 10 242 9 077 ZAR n/a 13.33 13.33 8 000 8 000 Aug 27 6 730 5 938 6 730 5 938 ZAR n/a 11.89 11.89 7 500 7 500 Dec 32 3 512 3 139 3 512 3 139 Foreign bonds 36 789 39 419 36 789 39 419 USD n/a1 5.42 5.42 500 500 Jul 27 8 396 8 965 8 396 8 965 USD n/a 8.47 8.47 500 500 Aug 28 8 563 9 251 8 563 9 251 USD n/a1 6.37 6.37 1 000 1 000 Aug 28 17 077 18 451 17 077 18 451 ZAR n/a1 14.15 14.15 2 753 2 753 Mar 31 2 753 2 752 2 753 2 752 Balances carried forward to the next page 222 406 218 488 227 157 223 663 1. Government guaranteed. 2. Includes, inter alia, instruments issued to subsidiaries. 3. Nqaba breached an early amortisation event trigger in June 2020. As a result, the cash flows from the assets in the securitisation structure are applied to repay the capital to all noteholders in a reducing order of rank (pari passu if equal rank) on a quarterly basis on or before the final maturity date, which is 32 years from the scheduled maturity date. 4. Holders have a right to first charge against revenue and assets of Eskom in terms of section 7 of the Eskom Conversion Act, 13 of 2001. 94 Group Company Currency Security Interest rate Nominal Maturity Carrying value Carrying value number date 2026 2025 2026 2025 2026 2025 2026 2025 % % m m Rm Rm Rm Rm Balances carried forward from the previous page 222 406 218 488 227 157 223 663 Development financing institutions1 117 249 133 562 117 249 133 562 ZAR n/a2 8.32 8.91 333 467 Aug 28 338 473 338 473 USD n/a2 5.72 6.52 48 68 Aug 28 827 1 252 827 1 252 EUR n/a2 2.48 3.96 261 283 Aug 29 5 117 5 637 5 117 5 637 ZAR n/a2 7.56 8.65 2 499 3 214 Aug 29 2 528 3 257 2 528 3 257 ZAR n/a2 10.10 10.10 1 377 1 771 Sep 29 1 375 1 767 1 375 1 767 CNY n/a2,3 3.50 3.50 9 446 2 786 Sep 30 23 244 7 045 23 244 7 045 USD n/a2 3.47 3.47 34 13 Sep 30 566 225 566 225 ZAR n/a 10.47 10.47 12 000 12 000 Jan 31 12 158 12 155 12 158 12 155 EUR n/a2 3.63 3.97 224 269 Feb 31 3 827 4 730 3 827 4 730 USD n/a2 5.17 5.96 3 4 Aug 31 57 73 57 73 USD n/a2,3 6.64 7.35 1 718 3 066 Sep 33 28 671 55 168 28 671 55 168 USD n/a2 7.47 8.27 6 6 Feb 36 89 106 89 106 ZAR n/a2 10.97 11.56 2 940 3 234 Feb 36 2 935 3 232 2 935 3 232 ZAR n/a2 9.14 9.14 22 000 23 765 May 38 22 836 24 670 22 836 24 670 USD n/a2 5.37 6.16 21 21 Aug 38 357 384 357 384 ZAR n/a2 7.70 9.05 1 610 1 698 Nov 38 1 632 1 704 1 632 1 704 USD n/a2 5.35 6.03 119 128 Mar 39 2 002 2 331 2 002 2 331 USD n/a2 3.10 6.47 6 2 Jun 42 104 37 104 37 ZAR n/a2 10.60 10.58 3 339 3 586 Nov 43 3 423 3 676 3 423 3 676 USD n/a2 0.25 0.25 227 232 May 51 3 854 4 255 3 854 4 255 USD n/a2 0.25 0.25 77 76 Feb 62 1 309 1 385 1 309 1 385 Export credit facilities 15 997 20 063 15 997 20 063 EUR n/a 5.14 5.14 9 49 Jan 27 178 953 178 953 EUR n/a 3.64 4.08 18 54 Jul 27 338 1 051 338 1 051 ZAR n/a 8.80 9.85 151 358 Jul 27 141 335 141 335 USD n/a2 9.43 10.11 750 750 Mar 29 12 605 13 598 12 605 13 598 USD n/a 2.32 2.32 181 248 Mar 31 2 735 4 126 2 735 4 126 Other loans and bonds4 543 542 8 386 21 386 ZAR n/a 12.67 13.56 500 500 Feb 27 509 510 509 510 On ZAR n/a 5 6.76 7.53 7 877 20 876 demand – – 7 877 20 876 On ZAR n/a5 – – 34 32 demand 34 32 – – 356 195 372 655 368 789 398 674 1. Latest in a range of maturity dates is indicated for these instruments. 2. Government guaranteed. 3. A portion of the USD loan was repaid and subsequently converted to CNY in August 2025 which resulted in a new maturity date. 4. Comprises of loans with various banking institutions. 5. Includes, inter alia, current accounts with subsidiaries that have no repayment terms. 95 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 26. Payments received in advance and contract liabilities and deferred income Customer Government Other Total connections grant Note Rm Rm Rm Rm 26.1 Payments received in advance 2026 Group Balance at beginning of the year 8 185 1 173 807 10 165 Payments received 2 218 1 977 438 4 633 Transfers to contract liabilities and deferred income 26.2 (632) (1 944) – (2 576) Income recognised (533) (135) (405) (1 073) Balance at end of the year 9 238 1 071 840 11 149 Maturity analysis 9 238 1 071 840 11 149 Non-current 6 820 – 110 6 930 Current 2 418 1 071 730 4 219 Company Balance at beginning of the year 5 188 1 173 713 7 074 Payments received 2 415 1 977 117 4 509 Transfers to contract liabilities and deferred income 26.2 (211) (1 944) – (2 155) Income recognised (511) (135) (233) (879) Balance at end of the year 6 881 1 071 597 8 549 Maturity analysis 6 881 1 071 597 8 549 Non-current 4 807 – 106 4 913 Current 2 074 1 071 491 3 636 2025 Group Balance at beginning of the year 6 862 1 763 688 9 313 Payments received 2 066 1 910 362 4 338 Transfers to contract liabilities and deferred income 26.2 (317) (2 398) – (2 715) Income recognised (426) (102) (243) (771) Balance at end of the year 8 185 1 173 807 10 165 Maturity analysis 8 185 1 173 807 10 165 Non-current 6 524 – 5 6 529 Current 1 661 1 173 802 3 636 Company Balance at beginning of the year 4 277 1 763 596 6 636 Payments received 1 508 1 910 270 3 688 Transfers to contract liabilities and deferred income 26.2 (212) (2 398) – (2 610) Income recognised (385) (102) (153) (640) Balance at end of the year 5 188 1 173 713 7 074 Maturity analysis 5 188 1 173 713 7 074 Non-current 3 586 – 84 3 670 Current 1 602 1 173 629 3 404 96 Customer Government Embedded Total connections grant derivatives Note Rm Rm Rm Rm 26.2 Contract liabilities and deferred income 2026 Group Balance at beginning of the year 5 378 24 629 7 858 37 865 Transfers of property, plant and equipment from customers 3 782 – – 3 782 Transfers from payments received in advance 26.1 632 1 944 – 2 576 Day-one fair value gain 16 – – 507 507 Income recognised 38 (431) (1 926) – (2 357) Amortisation of day-one fair value1 39 – – (2 991) (2 991) Balance at end of the year 9 361 24 647 5 374 39 382 Maturity analysis 9 361 24 647 5 374 39 382 Non-current 8 760 22 699 4 004 35 463 Current 601 1 948 1 370 3 919 Company Balance at beginning of the year 4 273 24 629 7 858 36 760 Transfers of property, plant and equipment from customers 1 226 – – 1 226 Transfers from payments received in advance 26.1 211 1 944 – 2 155 Day-one fair value gain 16 – – 507 507 Income recognised 38 (321) (1 926) – (2 247) Amortisation of day-one fair value1 39 – – (2 991) (2 991) Balance at end of the year 5 389 24 647 5 374 35 410 Maturity analysis 5 389 24 647 5 374 35 410 Non-current 5 105 22 699 4 004 31 808 Current 284 1 948 1 370 3 602 2025 Group Balance at beginning of the year 4 801 24 085 9 485 38 371 Transfers of property, plant and equipment from customers 644 – – 644 Transfers from payments received in advance 26.1 317 2 398 – 2 715 Income recognised 38 (384) (1 854) – (2 238) Amortisation of day-one fair value 39 – – (1 627) (1 627) Balance at end of the year 5 378 24 629 7 858 37 865 Maturity analysis 5 378 24 629 7 858 37 865 Non-current 5 074 22 736 6 231 34 041 Current 304 1 893 1 627 3 824 Company Balance at beginning of the year 3 763 24 085 9 485 37 333 Transfers of property, plant and equipment from customers 563 – – 563 Transfers from payments received in advance 26.1 212 2 398 – 2 610 Income recognised 38 (265) (1 854) – (2 119) Amortisation of day-one fair value 39 – – (1 627) (1 627) Balance at end of the year 4 273 24 629 7 858 36 760 Maturity analysis 4 273 24 629 7 858 36 760 Non-current 4 018 22 736 6 231 32 985 Current 255 1 893 1 627 3 775 1. Amortisation of day-one fair value includes accelerated amortisation of R1 308 million arising from a reassessment of the expected remaining contract life. 97 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 27. Employee benefit obligations Post- Pension Bonus Leave Total employment benefits medical benefits Note Rm Rm Rm Rm Rm 2026 Group Balance at beginning of the year 20 696 – 3 917 2 643 27 256 Recognised in profit or loss Employee benefit expense – raised 495 2 783 6 974 1 205 11 457 Finance cost 41 2 688 115 – – 2 803 Recognised in other comprehensive income Remeasurement of benefits 788 878 – – 1 666 Cash paid (1 032) (3 776) (5 181) (934) (10 923) Balance at end of the year 23 635 – 5 710 2 914 32 259 Maturity analysis 23 635 – 5 710 2 914 32 259 Non-current 22 530 – 3 – 22 533 Current 1 105 – 5 707 2 914 9 726 Company Balance at beginning of the year 19 232 – 3 056 2 057 24 345 Recognised in profit or loss Employee benefit expense – raised 442 1 994 5 193 966 8 595 Finance cost 41 2 493 115 – – 2 608 Recognised in other comprehensive income Remeasurement of benefits 729 878 – – 1 607 Cash paid (1 006) (2 987) (3 768) (754) (8 515) Balance at end of the year 21 890 – 4 481 2 269 28 640 Maturity analysis 21 890 – 4 481 2 269 28 640 Non-current 20 820 – – – 20 820 Current 1 070 – 4 481 2 269 7 820 2025 Group Balance at beginning of the year 18 374 – 477 2 374 21 225 Recognised in profit or loss Employee benefit expense – raised 414 2 308 6 070 1 171 9 963 Finance cost 41 2 750 92 – – 2 842 Recognised in other comprehensive income Remeasurement of benefits 88 989 – – 1 077 Cash paid (930) (3 389) (2 630) (902) (7 851) Balance at end of the year 20 696 – 3 917 2 643 27 256 Maturity analysis 20 696 – 3 917 2 643 27 256 Non-current 19 672 – – – 19 672 Current 1 024 – 3 917 2 643 7 584 Company Balance at beginning of the year 17 138 – 375 1 853 19 366 Recognised in profit or loss Employee benefit expense – raised 374 1 598 4 457 932 7 361 Finance cost 41 2 559 92 – – 2 651 Recognised in other comprehensive income Remeasurement of benefits 109 989 – – 1 098 Cash paid (905) (2 679) (1 776) (728) (6 088) Transfers (43) – – – (43) Balance at end of the year 19 232 – 3 056 2 057 24 345 Maturity analysis 19 232 – 3 056 2 057 24 345 Non-current 18 237 – – – 18 237 Current 995 – 3 056 2 057 6 108 Refer to note 4 for relevant critical accounting estimates and assumptions. 98 27.1 Post-employment medical benefits Group Company 2026 2025 2026 2025 Rm Rm Rm Rm Actuarial (loss)/gain Financial assumptions (1 099) (166) (1 005) (154) Experience adjustments 311 78 276 45 (788) (88) (729) (109) Expected maturity analysis of undiscounted benefits Non-current 245 267 438 116 221 126 393 947 Between one and two years 1 166 1 098 1 127 1 065 Between two and five years 3 936 3 899 3 783 3 760 After five years 240 165 433 119 216 216 389 122 Current 1 105 1 024 1 070 995 246 372 439 140 222 196 394 942 The group expects to pay R1 105 million and the company R1 070 million in contributions to this plan in 2027. The reduction in the undiscounted benefits is largely attributable to a decrease in the medical inflation assumption. Refer to note 4.2 for the principal actuarial assumptions used and a sensitivity analysis. 27.2 Pension benefits Movement reconciliation Group and company 2026 2025 Fund Asset Fund Net Fund Asset Fund Net assets ceiling obligations (liability)/ assets ceiling obligations (liability)/ adjustment asset adjustment asset Rm Rm Rm Rm Rm Rm Rm Rm Asset/(liability) at beginning of the year 217 656 (89 614) (128 042) – 197 510 (80 361) (117 149) – Recognised in profit or loss Employee benefit expense – – (2 783) (2 783) – – (2 308) (2 308) Finance income/(cost) 28 069 (11 648) (16 536) (115) 29 357 (12 054) (17 395) (92) Recognised in other comprehensive income Remeasurement of benefits 12 141 (13 518) 499 (878) (5 619) 2 801 1 829 (989) Return on plan assets in excess of finance cost 12 141 – – 12 141 (5 619) – – (5 619) Adjustment to asset ceiling – (13 518) – (13 518) – 2 801 – 2 801 Actuarial gain – – 499 499 – – 1 829 1 829 Payments received by the fund 5 752 – (1 976) 3 776 5 066 – (1 677) 3 389 Employer funded 3 776 – – 3 776 3 389 – – 3 389 Member funded 1 976 – (1 976) – 1 677 – (1 677) – Payments made by the fund (9 223) – 9 223 – (8 658) – 8 658 – Benefit and pension payments (8 404) – 8 404 – (7 816) – 7 816 – Fund management costs (480) – 480 – (435) – 435 – Net transfers (from)/to the fund (339) – 339 – (407) – 407 – Asset/(liability) at end of the year 254 395 (114 780) (139 615) – 217 656 (89 614) (128 042) – 99 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 27. Employee benefit obligations (continued) 27.2 Pension benefits (continued) Fund assets composition Group and company 2026 2025 Domestic International Total Domestic International Total Rm Rm Rm Rm Rm Rm Equities 98 334 59 560 157 894 87 019 59 900 146 919 Bonds 44 522 12 551 57 073 40 282 1 942 42 224 Issued by Eskom 2 194 – 2 194 2 151 – 2 151 Other 42 328 12 551 54 879 38 131 1 942 40 073 Property 16 889 – 16 889 12 117 – 12 117 Cash 7 529 1 682 9 211 1 322 4 125 5 447 Hedge funds 2 310 – 2 310 38 – 38 Collective investment schemes – 10 596 10 596 – 10 911 10 911 Other 422 – 422 – – – 170 006 84 389 254 395 140 778 76 878 217 656 Group and company 2026 2025 Rm Rm Actuarial gain Financial assumptions (2 291) (2 275) Experience adjustments 2 790 4 104 499 1 829 Expected maturity analysis of undiscounted benefits Non-current 903 712 1 578 754 Between one and two years 8 896 8 549 Between two and five years 28 565 28 704 After five years 866 251 1 541 501 Current 8 391 7 987 912 103 1 586 741 The group expects to pay R3 535 million and the company R2 743 million in contributions to this plan in 2027. The reduction in the undiscounted benefits is largely attributable to the decrease in the long-term price inflation, future salary inflation and future pension increase assumptions. Refer to note 4.3 for the principal actuarial assumptions used and a sensitivity analysis. 27.3 Bonus Bonus includes the provision for annual, performance and production bonuses. The annual bonus comprises of an accrual for a thirteenth cheque generally paid in November. Managerial employees can choose to spread the payment over the course of the year instead of receiving the full amount in November. 100 28. Provisions Power station-related Mine-related Compensation Other Total environmental restoration closure, events Nuclear plant Other pollution and spent fuel generating control and plant rehabilitation Note Rm Rm Rm Rm Rm Rm 2026 Group Balance at beginning of the year 16 068 17 635 14 240 4 392 1 967 54 302 Recognised in profit or loss 381 167 1 012 (853) 3 888 4 595 Raised 223 10 912 – 4 348 5 493 Reversed (1 230) (498) (532) (853) (460) (3 573) Change in discount rate 1 388 655 632 – – 2 675 Capitalised to property, plant and equipment 8 607 1 188 – (958) – 837 Raised – 371 – 847 – 1 218 Reversed – (278) – (1 805) – (2 083) Change in discount rate 607 1 095 – – – 1 702 Capitalised to future fuel supplies 10 – – 358 – – 358 Raised – – 391 – – 391 Reversed – – (140) – – (140) Change in discount rate – – 107 – – 107 Capitalised to inventories 13 84 – (4) – – 80 Raised 84 – 81 – – 165 Reversed – – (85) – – (85) Finance cost 41 1 400 1 666 1 227 – 1 4 294 Cash paid (317) – (497) (731) (2 399) (3 944) Balance at end of the year 18 223 20 656 16 336 1 850 3 457 60 522 Maturity analysis 18 223 20 656 16 336 1 850 3 457 60 522 Non-current 17 706 20 656 16 185 15 929 55 491 Current 517 – 151 1 835 2 528 5 031 Company Balance at beginning of the year 16 068 17 635 14 240 4 376 1 692 54 011 Recognised in profit or loss 381 167 1 012 (853) 2 871 3 578 Raised 223 10 912 – 3 138 4 283 Reversed (1 230) (498) (532) (853) (267) (3 380) Change in discount rate 1 388 655 632 – – 2 675 Capitalised to property, plant and equipment 8 607 1 188 – (945) – 850 Raised – 371 – 860 – 1 231 Reversed – (278) – (1 805) – (2 083) Change in discount rate 607 1 095 – – – 1 702 Capitalised to future fuel supplies 10 – – 358 – – 358 Raised – – 391 – – 391 Reversed – – (140) – – (140) Change in discount rate – – 107 – – 107 Capitalised to inventories 13 84 – (4) – – 80 Raised 84 – 81 – – 165 Reversed – – (85) – – (85) Finance cost 41 1 400 1 666 1 227 – – 4 293 Cash paid (317) – (497) (731) (2 282) (3 827) Balance at end of the year 18 223 20 656 16 336 1 847 2 281 59 343 Maturity analysis 18 223 20 656 16 336 1 847 2 281 59 343 Non-current 17 706 20 656 16 185 – 1 280 55 827 Current 517 – 151 1 847 1 001 3 516 101 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 28. Provisions (continued) Power station-related Mine-related Compensation Other1 Total environmental restoration closure, events Nuclear plant Other pollution and spent fuel generating control and plant rehabilitation Note Rm Rm Rm Rm Rm Rm 2025 Group Balance at beginning of the year 23 679 16 086 13 280 3 524 5 317 61 886 Recognised in profit or loss (2 082) (55) (72) 196 (738) (2 751) Raised 364 30 – 197 3 044 3 635 Reversed (2 427) (279) (116) (1) (3 782) (6 605) Change in discount rate (19) 194 44 – – 219 Capitalised to property, plant and equipment 8 (7 056) (84) – 1 090 – (6 050) Raised 361 25 – 1 523 – 1 909 Reversed (7 230) (455) – (433) – (8 118) Change in discount rate (187) 346 – – – 159 Capitalised to future fuel supplies 10 – – (234) – – (234) Raised – – 317 – – 317 Reversed – – (586) – – (586) Change in discount rate – – 35 – – 35 Capitalised to inventories 13 75 – 245 – – 320 Raised 75 – 274 – – 349 Reversed – – (29) – – (29) Finance cost 41 1 876 1 688 1 324 – (892) 3 996 Cash paid (424) – (303) (418) (1 720) (2 865) Balance at end of the year 16 068 17 635 14 240 4 392 1 967 54 302 Maturity analysis 16 068 17 635 14 240 4 392 1 967 54 302 Non-current 15 542 17 635 14 075 – 945 48 197 Current 526 – 165 4 392 1 022 6 105 Company Balance at beginning of the year 23 679 16 086 13 280 3 509 5 184 61 738 Recognised in profit or loss (2 082) (55) (72) 195 (968) (2 982) Raised 364 30 – 196 2 780 3 370 Reversed (2 427) (279) (116) (1) (3 748) (6 571) Change in discount rate (19) 194 44 – – 219 Capitalised to property, plant and equipment 8 (7 056) (84) – 1 090 – (6 050) Raised 361 25 – 1 523 – 1 909 Reversed (7 230) (455) – (433) – (8 118) Change in discount rate (187) 346 – – – 159 Capitalised to future fuel supplies 10 – – (234) – – (234) Raised – – 317 – – 317 Reversed – – (586) – – (586) Change in discount rate – – 35 – – 35 Capitalised to inventories 13 75 – 245 – – 320 Raised 75 – 274 – – 349 Reversed – – (29) – – (29) Finance cost 41 1 876 1 688 1 324 – (892) 3 996 Cash paid (424) – (303) (418) (1 632) (2 777) Balance at end of the year 16 068 17 635 14 240 4 376 1 692 54 011 Maturity analysis 16 068 17 635 14 240 4 376 1 692 54 011 Non-current 15 542 17 635 14 075 – 945 48 197 Current 526 – 165 4 376 747 5 814 Other consists mainly of provisions raised for take or pay penalties on coal contracts, public liability insurance as well as late system events and curtailment provisions at NTCSA. Refer to note 4.5 for relevant critical accounting estimates and assumptions for the power station-related environmental restoration and mine-related closure, pollution control and rehabilitation related provisions and note 45.2 for compensation events. 1. Restated. Refer note 49. 102 29. Lease liabilities 2026 2025 Gross Future Carrying Gross Future Carrying payables finance value payables finance value charges charges Rm Rm Rm Rm Rm Rm Group Non-current 7 526 (1 829) 5 697 9 250 (2 652) 6 598 Between one and five years 7 050 (1 753) 5 297 7 374 (2 447) 4 927 After five years 476 (76) 400 1 876 (205) 1 671 Current 2 059 (886) 1 173 2 143 (1 031) 1 112 9 585 (2 715) 6 870 11 393 (3 683) 7 710 Company Non-current 1 305 (346) 959 1 398 (405) 993 Between one and five years 829 (270) 559 792 (286) 506 After five years 476 (76) 400 606 (119) 487 Current 244 (113) 131 260 (142) 118 1 549 (459) 1 090 1 658 (547) 1 111 Group Company Restated Restated 2026 2025 2026 2025 Note Rm Rm Rm Rm Movement reconciliation Balance at beginning of the year 7 710 7 403 1 111 313 Additions 175 1 075 133 832 Disposals (5) (11) – (11) Finance costs 41 1 023 1 081 120 73 Cash paid (2 033) (1 838) (274) (96) Capital (1 010) (783) (154) (49) Finance costs (1 023) (1 055) (120) (47) Balance at end of the year 6 870 7 710 1 090 1 111 Refer to note 37 for short-term and low-value lease expenses. 30. Trade and other payables Financial instruments 52 792 52 714 71 885 67 829 Trade and other payables 34 319 34 564 52 902 50 316 Accruals 9 502 10 027 10 012 9 390 Deposits 8 971 8 123 8 971 8 123 Non-financial instruments 3 752 2 577 3 701 2 510 VAT 3 218 1 968 3 167 1 901 Environmental levy 534 609 534 609 56 544 55 291 75 586 70 339 Maturity analysis 56 544 55 291 75 586 70 339 Non-current 272 271 167 248 Current 56 272 55 020 75 419 70 091 31. Loan from shareholder Balance at beginning of the year 56 132 32 000 56 132 32 000 Amounts advanced 80 000 64 000 80 000 64 000 Converted to equity (56 000) (40 000) (56 000) (40 000) Net finance costs (56) 132 (56) 132 Balance at end of the year 80 076 56 132 80 076 56 132 Maturity analysis Current 80 076 56 132 80 076 56 132 The Minister of Finance approved the conversion of the loan to equity of R56 billion on 11 June 2025 (2025: R40 billion, consisting of R32 billion on 29 July 2024 and R8 billion on 21 October 2024). Refer to note 24 for details of the share capital issued. The interest rate on the loan from shareholder was 6.9% (2025: 7.9%). 103 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued Group Company 2026 2025 2026 2025 Note Rm Rm Rm Rm 32. Revenue Redistributors (metropolitan and municipal customers) 145 578 133 301 145 578 133 301 Invoiced to customers 161 422 145 299 161 422 145 299 Amounts not meeting collectability criteria 20 (29 995) (23 742) (29 995) (23 742) Recognised on a cash received basis 20 14 151 11 744 14 151 11 744 Residential 8 656 8 597 8 656 8 597 Invoiced to customers 8 655 8 532 8 655 8 532 Amounts not meeting collectability criteria 20 (117) (55) (117) (55) Recognised on a cash received basis 20 118 120 118 120 Industrial 54 730 63 509 54 853 63 589 Mining 60 078 52 761 60 078 52 761 Commercial 26 815 24 869 26 815 24 869 Agricultural 17 399 16 291 17 399 16 291 International 19 205 21 611 478 390 Rail 4 514 4 333 4 514 4 333 Public lighting 377 354 377 354 Post-paid electricity sales 337 352 325 626 318 748 304 485 Prepaid electricity sales 15 727 13 275 15 727 13 275 Total electricity sales 353 079 338 901 334 475 317 760 Connections 1 262 1 260 1 130 1 100 Other 383 734 379 806 354 724 340 895 335 984 319 666 33. Other income Insurance proceeds 150 267 459 657 Services income 62 12 – – Management fees and cost recoveries – – 1 861 622 Operating lease income 269 268 139 141 Dividend income 102 72 143 102 Net gain on modification of loans receivable1 – 1 719 – 1 719 Other 700 927 1 406 1 511 1 283 3 265 4 008 4 752 34. Primary energy Own generation costs 103 073 98 011 103 068 98 008 International electricity purchases 3 669 6 554 14 14 Independent power producers 45 154 45 642 – – Net internal energy costs – – 57 027 73 709 151 896 150 207 160 109 171 731 Generation costs include the cost of coal (including logistics), uranium, water and liquid fuels that are used in the generation of electricity. Eskom uses a combination of short-, medium- and long-term agreements with suppliers for coal purchases and long-term agreements with the Department of Water and Sanitation to reimburse the department for the cost incurred in supplying water to Eskom. Net internal energy costs relate to charges from NTCSA to Eskom for network, capacity and external energy purchases. Refer to note 7. 1. The net gain on modification of loan receivable relates to a payment arrangement which resulted in the derecognition of the electricity receivable and recognition of a loan receivable. 104 Group Company Restated Restated 2026 2025 2026 2025 Note Rm Rm Rm Rm 35. Employee benefit expense Salaries 32 721 29 537 25 781 23 378 Overtime 3 490 3 253 2 681 2 561 Post-employment medical benefits 495 414 442 374 Pension benefits 2 783 2 308 1 994 1 598 Annual bonus1 1 705 1 549 1 354 1 231 Performance bonus2 4 342 3 731 3 448 2 921 Production bonus3 1 630 1 212 1 137 817 Leave 1 204 1 171 966 932 Direct costs of employment 48 370 43 175 37 803 33 812 Direct training and development 221 180 126 114 Temporary and contract staff costs 637 625 352 303 Other staff costs 1 203 1 378 978 1 084 Gross employee benefit expense 50 431 45 358 39 259 35 313 Capitalised to property, plant and equipment (2 371) (2 198) (1 983) (1 893) 48 060 43 160 37 276 33 420 36. Net impairment and write down of assets 36.1 Financial assets Loans receivable 222 (25) (339) (5) Finance lease receivables (1) – – – Trade and other receivables 5 (118) 7 313 93 7 642 Treasury investments 121 7 121 7 Insurance investments 89 45 – – 313 7 340 (125) 7 644 Bad debts recovered – trade and other receivables (32) (23) (32) (23) 281 7 317 (157) 7 621 36.2 Other assets Inventories 13 299 (94) 304 (99) Trade and other receivables 537 393 537 393 836 299 841 294 1 117 7 616 684 7 915 37. Other expenses Managerial, technical and other fees 904 1 181 826 768 Lease expense 863 849 141 196 Short term 821 794 113 159 Low value 42 55 28 37 Auditors’ remuneration4 397 302 359 273 Audit of financial statements 387 292 349 263 Other assurance and related services 9 9 9 9 Regulatory related services 1 1 1 1 Net loss on disposals and write-offs of property, plant and equipment and intangible assets 1 344 3 431 1 270 2 797 Net loss on modification of loans receivable5 1 019 – 1 379 – Repairs and maintenance, transport and other expenses 41 759 39 402 50 866 46 493 46 286 45 165 54 841 50 527 38. Depreciation and amortisation expense Depreciation of property, plant and equipment 8 38 226 33 593 35 347 31 010 Amortisation of intangible assets 9 35 25 32 23 Contract liabilities and deferred income recognised (government grant) 26.2 (1 926) (1 854) (1 926) (1 854) 36 335 31 764 33 453 29 179 1. The annual bonus represents a thirteenth cheque. Refer to note 27.3. 2. The performance bonus relates to the STI scheme. 3. The production bonus is self-funded and rewards employees for improved efficiency, operational productivity and performance in the production environment as well as the reduction in the number of zero prepaid buyers in the distribution environment. 4. Presented in line with the International Ethics Standards Board for Accountants Code Disclosure Requirements. 5. The net loss on modification of loans receivable relates to payment arrangements with three municipalities that resulted in the derecognition of electricity receivables and recognition of loans receivable as well as early settlement of the intercompany term loan by NTCSA. 105 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued Group Company Restated Restated 2026 2025 2026 2025 Note Rm Rm Rm Rm 39. Net fair value, foreign exchange gain/(loss) and deferred income amortisation Loss on items carried at fair value (9 470) (17 525) (9 833) (17 592) Insurance investments 564 252 – – Derivatives held for risk management 17 (10 070) (11 575) (9 869) (11 390) Embedded derivatives 16 (2 955) (7 829) (2 955) (7 829) Deferred income 26 2 991 1 627 2 991 1 627 Gain on foreign currency translation of items carried at amortised cost 8 647 5 832 8 626 5 831 Cash and cash equivalents (168) (63) (168) (63) Trade and other payables 50 (76) 29 (77) Debt securities and borrowings 8 765 5 971 8 765 5 971 Amounts recycled to profit or loss from cash flow hedge reserve Ineffective portion of cash flow hedges (303) 1 278 (303) 1 278 (1 126) (10 415) (1 510) (10 483) 40. Finance income Treasury investments 267 224 267 224 Insurance investments 1 967 1 754 – – Loans receivable 2 075 1 126 5 029 4 266 Finance lease receivables 19 24 11 13 Trade and other receivables1 (437) 1 495 (550) 1 445 Invoiced to customers 3 983 4 015 3 870 3 965 Amounts not meeting collectability criteria 20 (4 420) (2 520) (4 420) (2 520) Cash and cash equivalents 4 556 2 217 4 462 2 211 8 447 6 840 9 219 8 159 Cash interest included in finance income comprises: Insurance investments 2 034 1 387 – – Loans receivable 831 910 3 706 3 660 Finance lease receivables 19 24 11 13 Trade and other receivables 390 441 333 395 Cash and cash equivalents 4 556 2 217 4 462 2 211 7 830 4 979 8 512 6 279 41. Finance cost Debt securities and borrowings 30 241 33 388 33 366 35 322 Eskom bonds 14 153 13 364 14 605 13 811 Commercial paper 53 72 – – Eurorand zero coupon bonds 1 165 1 032 1 165 1 032 Foreign bonds 2 707 4 281 2 707 4 281 Development financing institutions 9 427 10 858 9 427 10 858 Export credit facilities 1 665 2 158 1 665 2 158 Other loans and guarantee fees 1 071 1 623 3 797 3 182 Derivatives held for risk management 5 433 4 723 5 433 4 723 Employee benefit obligations 27 2 803 2 842 2 608 2 651 Provisions 28 4 294 3 996 4 293 3 996 Lease liabilities 29 1 023 1 081 120 73 Trade and other payables 198 647 221 625 Loan from shareholder 896 382 896 382 Gross finance cost 44 888 47 059 46 937 47 772 Capitalised to property, plant and equipment 8 (4 555) (6 147) (2 729) (4 340) 40 333 40 912 44 208 43 432 Cash interest included in finance cost comprises: Debt securities and borrowings 22 158 27 061 22 498 27 381 Derivatives held for risk management 5 830 4 998 5 830 4 998 Lease liabilities 1 023 1 055 120 47 Trade and other payables 7 26 7 4 Loan from shareholder 952 250 952 250 29 970 33 390 29 407 32 680 1. Interest income on trade and other receivables include reversal of interest following the conclusion of settlement and payment arrangements. 106 42. Income tax Group Company Restated Restated 2026 2025 2026 2025 Rm Rm Rm Rm Recognised in profit or loss Current tax 8 218 6 575 2 400 – Current year 8 211 6 575 2 400 – Over provided in prior years 7 – – – Deferred tax 838 1 247 637 213 (Reversal)/raised of temporary differences (7 175) 547 (7 380) (382) (Reversal)/raised of temporary differences (7 178) 691 (7 380) (235) Under/(over) provided in prior years 3 (144) – (147) Tax losses 9 624 (1 152) 9 632 (891) Raised/(reversal) of temporary differences 9 624 (1 296) 9 632 (1 038) Under provided in prior years – 144 – 147 (Recognition)/derecognition of deferred tax asset (1 611) 1 852 (1 615) 1 486 9 056 7 822 3 037 213 Reconciliation between standard and effective tax rate: R million Taxation income/(expense) at standard rate 10 638 5 903 4 625 (3 810) Non-taxable income (515) (420) (552) (413) Government grants (379) (363) (379) (363) Dividend income (7) (18) (39) (28) Incentive allowances1 (129) (39) (134) (22) Expenses not deductible for tax purposes 534 487 579 2 950 Non-deductible capital expenditure 2 525 447 570 302 NTCSA profit taxed in Eskom3 – – – 2 608 Donations 9 40 9 40 Prior period under provision 10 – – – (Recognition)/derecognition of deferred tax asset4 (1 611) 1 852 (1 615) 1 486 Taxation expense per the income statement 9 056 7 822 3 037 213 % Taxation income at standard rate 27.00 27.00 27.00 27.00 Non-taxable income (1.31) (1.92) (3.22) 2.93 Government grants (0.96) (1.67) (2.21) 2.56 Dividend income (0.02) (0.08) (0.23) 0.20 Incentive allowances1 (0.33) (0.17) (0.78) 0.17 Expenses not deductible for tax purposes 1.36 2.23 3.38 (20.91) Non-deductible capital expenditure2 1.34 2.05 3.33 (2.15) NTCSA profit taxed in Eskom3 – – – (18.48) Donations 0.02 0.18 0.05 (0.28) Adjustments to current tax of prior periods 0.03 – – – (Recognition)/derecognition of deferred tax asset4 (4.10) 8.47 (9.43) (10.53) Taxation income/(expense) per the income statement 22.98 35.78 17.73 (1.51) 1. Non-taxable income arising from incentive allowances resulted in a permanent difference between accounting profit and taxable income. 2. Non-deductible capital expenditure includes expenditure of a capital nature and not incurred in the production of income. 3. Eskom transferred the assets and liabilities of the transmission division to NTCSA with the accounting date for the disposal being 31 March 2024, while the legal implementation date of the merger agreement and operationalisation of NTCSA was 1 July 2024. The taxable income for NTCSA from 1 April 2024 to 30 June 2024 was therefore included and taxed in Eskom. 4. Deferred tax assets not recognised relate to the movement of the deferred tax on unused tax losses for the financial year. Refer to note 14. 107 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 42. Income tax (continued) 2026 2025 Before tax Tax Net of tax Before tax Tax Net of tax Rm Rm Rm Rm Rm Rm Recognised in other comprehensive income Group Cash flow hedges (753) 203 (550) 310 (84) 226 Net change in fair value (962) 260 (702) 1 781 (481) 1 300 Net amount transferred to profit or loss 303 (82) 221 (1 278) 345 (933) Net amount transferred to initial carrying amount of hedged items (94) 25 (69) (193) 52 (141) Foreign currency translation differences (2) – (2) – – – Remeasurement of benefits (1 666) 450 (1 216) (1 077) 291 (786) (2 421) 653 (1 768) (767) 207 (560) Company Cash flow hedges (753) 203 (550) 310 (84) 226 Net change in fair value (962) 260 (702) 1 781 (481) 1 300 Net amount transferred to profit or loss 303 (82) 221 (1 278) 345 (933) Net amount transferred to initial carrying amount of hedged items (94) 25 (69) (193) 52 (141) Remeasurement of benefits (1 607) 434 (1 173) (1 098) 297 (801) (2 360) 637 (1 723) (788) 213 (575) 43. Cash generated from operations Group Company Restated Restated 2026 2025 2026 2025 Rm Rm Rm Rm Profit/(loss) before tax 39 401 21 863 17 130 (14 110) Adjustments for: 87 419 91 631 84 276 87 363 Depreciation and amortisation expense 36 335 31 764 33 453 29 179 Depreciation expense – primary energy 10 11 10 11 Impairment and write down of assets (excluding bad debts recovered) 1 149 7 639 716 7 938 Net fair value gain on financial instruments 1 126 10 415 1 510 10 483 Net loss on disposals and write-offs of property, plant and equipment 1 344 3 431 1 270 2 797 Net loss/(gain) on modification of loans receivable 1 019 (1 719) 1 379 (1 719) Transfer of assets from non-electricity purchasing customers (298) (450) (298) (450) Dividend income (102) (72) (143) (102) Increase in employee benefit obligations 11 457 9 963 8 595 7 361 Increase/(decrease) in provisions 4 595 (2 751) 3 578 (2 982) Decrease in contract liabilities and deferred income (431) (384) (321) (265) Payments made in advance recognised in profit or loss 502 585 417 479 Payments received in advance recognised in profit or loss (1 073) (771) (879) (640) Finance income (8 447) (6 840) (9 219) (8 159) Finance cost 40 333 40 912 44 208 43 432 Share of profit of equity-accounted investees (100) (102) – – 126 820 113 494 101 406 73 253 Changes in working capital: (22 407) (20 128) (23 343) (12 649) Increase in payments made in advance (685) (856) (641) (794) Increase in inventories (6 209) (2 364) (6 620) (2 050) Increase in trade and other receivables (5 620) (12 902) (12 449) (31 901) Increase in trade and other payables 219 2 156 4 079 27 057 Expenditure incurred on employee benefit obligations (10 923) (7 851) (8 515) (6 088) Expenditure incurred on provisions (3 822) (2 649) (3 706) (2 561) Increase in payments received in advance 4 633 4 338 4 509 3 688 104 413 93 366 78 063 60 604 108 44. Net debt reconciliation The net debt reconciliation includes the changes arising from financing activities. Debt Loan from Lease Derivatives Payments Cash and Net debt securities shareholder2 liabilities3 held for risk made in cash and management4 advance5 equivalents6 borrowings1 Rm Rm Rm Rm Rm Rm Rm Group Balance at 31 March 2024 412 200 32 000 7 403 (26 305) (653) (23 585) 401 060 Net cash (decrease)/increase (37 741) 64 000 (783) 4 555 (131) (40 265) (10 365) Net fair value and foreign exchange (gains)/losses (5 971) – – 8 201 – 63 2 293 Assets and liabilities held-for-sale – – – – 26 26 Other movements 4 167 7 (39 868) 1 090 (274) 523 – (34 362) Balance at 31 March 2025 372 655 56 132 7 710 (13 823) (261) (63 761) 358 652 Net cash (decrease)/increase (15 260) 80 000 (1 010) (667) (87) (61 285) 1 691 Net fair value and foreign exchange (gains)/losses (8 765) – – 10 205 – 168 1 608 Foreign currency translation – – – – – 2 2 Assets and liabilities held-for-sale – – – – – (26) (26) Other movements 7 5657 (56 056) 170 (398) 104 – (48 615) Balance at 31 March 2026 356 195 80 076 6 870 (4 683) (244) (124 902) 313 312 Company Balance at 31 March 2024 420 285 32 000 313 (26 305) (653) (22 965) 402 675 Net cash (decrease)/increase (22 069) 64 000 (49) 4 555 (131) (39 855) 6 451 Net fair value and foreign exchange (gains)/losses (5 971) – – 8 201 – 63 2 293 Other movements 6 4297 (39 868) 847 (274) 523 – (32 343) Balance at 31 March 2025 398 674 56 132 1 111 (13 823) (261) (62 757) 379 076 Net cash (decrease)/increase (30 863) 80 000 (154) (667) (87) (61 305) (13 076) Net fair value and foreign exchange (gains)/losses (8 765) – – 10 205 – 168 1 608 Other movements 9 7437 (56 056) 133 (398) 104 – (46 474) Balance at 31 March 2026 368 789 80 076 1 090 (4 683) (244) (123 894) 321 134 Financing activities exclude cash and cash equivalents. 45. Financial guarantees, contingent liabilities and assets 45.1 Financial guarantees EFC loans to group employees EFC has granted home loans, secured by mortgage bonds on the properties, to qualifying employees of the group. Eskom has issued guarantees to EFC for losses incurred on loans exceeding 80% of the property value at the date of origination. Eskom’s guarantee exposure is governed by the probability of default of the underlying loan portfolio, which is influenced by factors such as the employment status of the borrower and arrears on repayments. The risk-adjusted credit exposure is calculated by applying default probabilities determined in accordance with the expected credit loss methodology. Refer to note 4.7. Group Company 2026 2025 2026 2025 Rm Rm Rm Rm Financial guarantee – – 361 191 45.2 Contingent liabilities Legal claims There are legal claims in process against Eskom as a result of disputes with various parties. Based on the evidence available, there is no present obligation relating to these claims. The claims are disclosed as a contingent liability and amounted to 91 40 74 38 Compensation events The final settlement of open compensation claims is generally far below the amount claimed by contractors. The adjudication rulings are mostly in favour of Eskom, resulting in no additional expenditure being incurred. Eskom recognises a provision based on the best estimate of the potential expenditure required to settle open compensation claims. There are uncertainties relating to the finalisation of open compensation events which are subject to a contractual adjudication process where the outcome could be different to management’s assessment of the probability of an outflow of resources and best estimate of the expenditure. The potential financial impact can therefore not be precisely determined due to the ongoing nature of the negotiations and the complexities involved. 1. Refer to note 25. 2. Refer to note 31. 3. Refer to note 29. 4. Refer to note 17 (hedge exposure covering debt securities and borrowings). 5. Refer to note 19 (securing debt raised). 6. Refer to note 22. 7. Mainly constitutes interest accrual. 109 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 45. Financial guarantees, contingent liabilities and assets (continued) 45.2 Contingent liabilities (continued) Compensation events (continued) Eskom is actively engaging with the relevant parties to resolve matters in line with the contractual agreements. The group continuously monitors the developments related to these contingencies and will recognise the liabilities in the financial statements when it becomes probable that an outflow of resources will be required and the amount can be reasonably estimated. The estimated potential contingent liabilities at 31 March 2026 arising from compensation events were R3 283 million (2025: R4 507 million) considering the historical outcomes on similar matters. Claims from customers Some electricity customers occasionally submit claims against Eskom because of billing disputes. These claims are subject to a dispute investigations process of which the outcome is uncertain and the potential financial impact cannot be reliably determined. Non-technical energy losses The Eskom online vending system environment was compromised in the 2024 financial year which resulted in the creation of illicit prepaid electricity tokens for Eskom and those municipalities that make use of Eskom’s online vending platform. When an illicit token is loaded into a prepaid meter, the token will be accepted and update the meter with the available credit kilowatt hours. There is a cost associated with delivering electricity against the credit kilowatt hours for customers using illicit tokens. This results in non-technical losses for delivery against illicit tokens used and will also result in future non-technical losses for unused illicit tokens, as no corresponding revenue will be received. Refer to note 52.3 for the current non-technical losses experienced. The potential obligations emanating from the exposure that illicit tokens can be used in the future cannot be reliably measured because of the high level of uncertainty around the completeness of the number of illicit prepaid electricity tokens created as well as the number of tokens already used. 45.3 Contingent assets There are certain negotiation processes underway by the SIU for the recovery of payments by Eskom arising from state capture. Further details are not currently available as Eskom is reliant on the process as controlled by the SIU. The outcome of these processes will be assessed once the details are made available to Eskom. 46. Commitments Group Company 2026 2025 2026 2025 Rm Rm Rm Rm 46.1 Capital expenditure Contracted capital expenditure 42 274 35 784 21 956 28 646 Within one year 24 829 22 350 16 534 21 441 One to five years 17 422 12 945 5 399 6 716 After five years 23 489 23 489 Capital expenditure excludes finance costs capitalised and foreign currency fluctuations. The capital expenditure will be financed through drawdowns from existing project-related loan agreements and internally generated funds. The capital programme will be reviewed and reprioritised by management in line with the funds available. 46.2 Leases As lessee The future minimum lease payments payable under non-cancellable leases are: Within one year 78 684 48 33 Short-term leases 15 636 15 1 Low-value leases 60 47 30 31 Right-of-use leases not yet commenced 3 1 3 1 One to five years 41 39 10 39 Low-value leases 40 35 9 35 Right-of-use leases not yet commenced 1 4 1 4 Total 119 723 58 72 Short-term leases 15 636 15 1 Low-value leases 100 82 39 66 Right-of-use leases not yet commenced 4 5 4 5 The lease payments payable under non-cancellable leases are of a similar nature to the right- of-use, short-term and low-value leases recognised in the statement of financial position and income statement. As lessor The future minimum lease payments receivable under non-cancellable operating leases are: 166 175 52 17 Within one year 135 134 21 8 One to five years 31 41 31 9 The future minimum lease payments receivable under non-cancellable finance leases not yet recognised in the statement of financial position are: 5 - 5 - Within one year 1 - 1 - One to five years 4 - 4 - The lease payments receivable under non-cancellable leases are of a similar nature to the right-of-use, short-term and low-value leases recognised in the statement of financial position and income statement. 110 47. Related-party transactions and balances Eskom (and its subsidiaries) are classified as schedule 2 public entities in terms of the PFMA and government-related entities under IAS 24 Related Party Disclosures. Eskom is part of the national sphere of government and its related parties in that sphere include national departments (including the shareholder), constitutional institutions and public entities (schedule 1, 2 and 3). A list of related parties is provided by National Treasury on its website www.treasury.gov.za. Related parties include subsidiaries, associates and joint ventures of the group and post-employment benefit plans for the benefit of employees. It also includes key management personnel of Eskom and close family members of these related parties. Key management personnel for Eskom include the group’s board of directors and Exco. The related-party transactions with directors and key management personnel are disclosed in note 50 and government guarantees issued to Eskom in note 5.3.2. Group Company Restated Restated 2026 2025 2026 2025 Rm Rm Rm Rm Transactions Sales of goods and services 18 361 17 344 279 982 240 016 National departments 1 961 1 949 1 961 1 949 Public entities 10 922 10 030 10 828 9 936 Subsidiaries, associates and joint ventures 5 478 5 365 267 193 228 131 Government grant funding received for electrification National departments 1 978 1 910 1 978 1 910 Purchases of goods and services 10 226 6 661 347 985 320 690 National departments 1 902 2 081 1 902 2 081 Public entities 4 502 1 081 2 845 (199) Subsidiaries, associates and joint ventures 46 110 340 251 316 129 Eskom Pension and Provident Fund 3 776 3 389 2 987 2 679 Bad debts expense Public entities – 2 – 2 Net fair value and foreign exchange loss Subsidiaries, associates and joint ventures – – 200 185 Finance income 1 331 76 5 114 4 121 National departments 13 12 13 12 Public entities 1 318 64 1 316 59 Subsidiaries, associates and joint ventures – – 3 785 4 050 Finance cost1 10 478 9 340 13 656 11 346 National departments 1 893 1 378 1 893 1 378 Public entities 8 389 7 791 8 389 7 791 Subsidiaries, associates and joint ventures – – 3 178 2 006 Eskom Pension and Provident Fund 196 171 196 171 Dividend income Subsidiaries, associates and joint ventures – – 144 102 Lease income 14 8 6 5 National departments 3 – – – Public entities 10 8 2 2 Subsidiaries, associates and joint ventures 1 – 4 3 Lease expenses 1 3 3 2 Public entities 1 3 1 – Subsidiaries, associates and joint ventures – – 2 2 Environmental levy Public entities 6 826 7 273 6 821 7 270 1. Bonds are bearer instruments and it is therefore unknown if the initial counterparty still holds the bonds. Transactions in the secondary market where Eskom is not the counterparty are therefore excluded. 111 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 47. Related-party transactions and balances (continued) Group Company Restated Restated 2026 2025 2026 2025 Rm Rm Rm Rm Outstanding balances (due by related parties) Receivables and amounts owed by related parties 3 667 6 711 30 543 27 875 National departments 259 255 247 246 Public entities 3 240 5 979 1 365 4 034 Subsidiaries, associates and joint ventures 168 477 28 931 23 595 Payments made in advance Eskom subsidiaries – – 56 12 Loans receivable Subsidiaries, associates and joint ventures1 – – 14 955 37 956 Total due by related parties 3 667 6 711 45 554 65 843 Cash and cash equivalents Public entities 32 993 16 643 32 993 16 643 Net derivative asset held for risk management Subsidiaries, associates and joint ventures – – 14 31 Outstanding balances (due to related parties) Debt securities and borrowings 112 910 125 308 126 018 151 359 National departments 84 – 84 – Public entities 110 632 123 157 110 632 123 157 Subsidiaries, associates and joint ventures2 – – 13 108 26 051 Eskom Pension and Provident Fund 2 194 2 151 2 194 2 151 Loan from shareholder National departments 80 076 56 132 80 076 56 132 Payables and amounts owed to related parties 8 114 5 709 38 335 33 087 Constitutional institutions 10 7 – 7 National departments 2 274 1 386 2 274 1 386 Public entities 5 447 3 950 4 164 3 870 Subsidiaries, associates and joint ventures – 14 31 562 27 516 Eskom Pension and Provident Fund 383 352 335 308 Payments received in advance 1 068 1 169 1 128 1 262 National departments 1 068 1 169 1 068 1 169 Subsidiaries, associates and joint ventures – – 60 93 Total due to related parties 202 168 188 318 245 557 241 840 Equity Capital and reserves National departments 56 000 84 000 56 000 84 000 Commitments Eskom does not have any material commitments with its related parties. 1. The effective interest rate on the loans to subsidiaries was 8.12% (2025: 8.12%). 2. Refer to note 25 for the effective interest rate and maturity date relating to intercompany instruments. 112 48. Events after the reporting date The following significant events occurred after 31 March 2026: Changes in Exco Mr J Munshi was appointed group executive: distribution effective from 1 June 2026. Mr SJ Mthembu was appointed group executive: legal, compliance and regulation effective from 1 June 2026. Interim concessionary pricing framework for ferrochrome smelters NERSA approved an amended negotiated pricing agreement framework, including an interim concessionary pricing framework of 62c/kWh for the Samancor Chrome and Glencore-Merafe Chrome ferrochrome smelters on 29 May 2026. The agreements with the smelters are effective from 1 June 2026 for five and three years respectively. The impact of the new agreements are in the process of being determined and will likely result in a change in the fair value of the embedded derivative. Pricing agreement with manganese metal company NERSA announced the approval of a two-year negotiated pricing agreement between Eskom and Manganese Metal Company (Pty) Ltd on 19 August 2026 for the period 1 August 2026 to July 2028 following an application by Eskom on 28 May 2026. The approval includes a special base tariff escalated annually on 1 April by the PPI plus one percent for the duration of the agreement. NERSA is expected to publish its reasons for decisions in due course. Debt relief The Minister of Finance approved the conversion to equity of the R80 billion loan from shareholder for debt relief support from government on 9 August 2026. Municipal debt relief programme write-off National Treasury instructed Eskom on 4 May, 5 May and 30 June 2026 to write-off one-third of the overdue ring-fenced debt in terms of the municipal debt relief programme for 21 municipalities totalling R4.0 billion. Refer to note 5.1.1. Payment arrangement with City of Johannesburg The City of Johannesburg metropolitan municipality breached the conditions of its payment arrangement with Eskom on 13 April 2026, resulting in all outstanding debt becoming immediately due and payable. Eskom issued a notice of its intention to reduce, interrupt or terminate electricity supply to certain of the City of Johannesburg and City Power bulk supply points on 19 May 2026 after failure to settle its arrear debt. The arrear debt and current account balance outstanding at 31 March 2026 were settled after financial year end with all arrear debt settled in full by 21 August 2026. Eskom therefore withdrew the consultation process prescribed by the Promotion of Administrative Justice Act in relation to proposed supply interruption measures. Sale of EFC disposal group Eskom announced on 5 May 2026 that the planned sale of the EFC disposal group to African Bank Limited would not proceed as the relevant agreements expired on 31 March 2026. Refer to note 23. Matla power station long-term coal supply agreement A long-term coal supply agreement was entered into with Exxaro Resources Limited for the continued supply of coal to the Matla power station, aligning the contract period with the operational lifespan of the power station. The agreement is effective from 1 April 2026 until 30 November 2043 and allows for possible extension or reduction by mutual consent. Lethabo power station solar project Eskom commenced construction of a 75MW solar power plant at Lethabo power station in May 2026. The project forms part of Eskom’s renewable energy programme with an estimated capital cost of R1.2 billion. Construction projects settlement agreement Eskom entered into a settlement agreement with a contractor on 25 June 2026 concerning all outstanding claims, disputes, deductions, variations and defect-related matters linked to the construction projects. All existing claims and disputes have been fully and conclusively settled with no further payments required from either party regarding these matters. The settlement was assessed as a non-adjusting event as the underlying circumstances occurred after the reporting date. Liabilities totalling R3.0 billion were recognised and an additional R3.0 billion were disclosed as contingent liabilities for unresolved contractor claims at 31 March 2026. The financial effect of the settlement will be accounted for in the 2027 reporting period. Gas-to-power programme Eskom and Zululand Energy Terminal signed an agreement on 5 June 2026 which established a framework for a long-term strategic partnership for the Eskom Richards Bay 3 000MW gas-to-power project. Maturity and settlement of Eskom ES26 bond The ES26 bond, with an outstanding nominal balance of R38 billion, reached maturity and was fully settled on 2 April 2026. The related guarantee facility used under the Guarantee Framework Agreement was cancelled upon settlement of the bond. Guarantee fees payable The Minister of Finance approved the deferral of guarantee fees payable to the National Revenue Fund on 28 April 2026. Guarantee fees of R980 million and R984 million for 2025 and 2026 respectively are payable in March 2027. Refer to note 5.3.2. Credit ratings Moody’s affirmed Eskom’s B2 rating on long-term foreign currency debt and Ba2 rating on government guaranteed notes on 29 May 2026 with a stable outlook. Fitch upgraded Eskom’s B rating on local currency debt (including long-term issuer default and senior unsecured debt ratings) to a B+ on 12 June 2026 with a stable outlook. Eskom Green Eskom Green was launched on 9 June 2026 and is expected to offer a range of renewable electricity solutions. Eskom received approval on 16 July 2026 in terms of section 54(2) of the PFMA, read with the applicable conditions of the Eskom Debt Relief Act, to proceed with the establishment of Eskom Green as a wholly owned subsidiary. 113 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 48. Events after the reporting date (continued) Progress on unbundling process The endorsement by the President of the Phase I Report prepared by the ERTT, which focuses on the development of a high-level proposal for the establishment of the independent, state-owned transmission system operator, was announced on 31 July 2026. Eskom is unable to assess the full expected impact of the ERTT process on the financial statements due to uncertainties. Refer to note 3.2 and 3.3. Electricity market transformation The Department of Electricity and Energy published the Electricity Market Transformation Position Paper for public comment on 21 August 2026. The position paper forms part of Government's ongoing electricity sector reform programme and seeks to consolidate various initiatives aimed at establishing a competitive wholesale electricity market and facilitating greater market participation. The Revised Electricity Pricing Policy 2026 was gazetted on 28 August 2026 for public comment. The revised policy aims to improve affordability, transparency and predictability in tariff setting. Eskom is assessing the potential implications of these publications and will continue to participate in the related consultation processes. 49. Restatement of comparatives No provision was recognised for public liability claims against Eskom. The obligation remains with Eskom even though Eskom is insured for the liability. In addition, no accrual was recognised for guarantee fees payable to the National Revenue Fund under the Guarantee Framework Agreement where certain ratios exceeded the specific thresholds in 2025 (refer to note 5.3.2). The 2025 statement of financial position and income statement have been restated to correct these errors as follows: Group Company Previously Previously reported Adjustments Restated reported Adjustments Restated Rm Rm Rm Rm Rm Rm Statements of financial position at 31 March 2025 Equity Capital and reserves 278 345 (2 006) 276 339 227 420 (2 006) 225 414 Liabilities Non-current Provisions 47 447 750 48 197 47 447 750 48 197 Current Provisions 5 829 276 6 105 5 538 276 5 814 Trade and other payables 54 040 980 55 020 69 111 980 70 091 Income statements for the year ended 31 March 2025 Other expenses (44 139) (1 026) (45 165) (49 501) (1 026) (50 527) Profit before net finance cost and share of profit of equity-accounted investees 56 859 (1 026) 55 833 22 189 (1 026) 21 163 Net finance cost (33 092) (980) (34 072) (34 293) (980) (35 273) Finance income 6 840 – 6 840 8 159 – 8 159 Finance cost (39 932) (980) (40 912) (42 452) (980) (43 432) Share of profit of equity-accounted investees after tax 102 – 102 – – – Profit/(loss) before tax 23 869 (2 006) 21 863 (12 104) (2 006) (14 110) Income tax (7 822) – (7 822) (213) – (213) Profit/(loss) for the year 16 047 (2 006) 14 041 (12 317) (2 006) (14 323) The impacted notes to the annual financial statements have been updated where relevant because of the restatements. The restatements also resulted in various restatements in the capital management, financial risk management, accounting classification, segment reporting, deferred tax and related parties disclosures. The restatement had no impact on the statement of cash flows outside of the note disclosure relating to cash generated from operations with no overall impact on cash generated from operating activities. 50. Remuneration of directors and executives Eskom’s remuneration policies for non-executive directors and executives are implemented in line with Government’s guidelines for the remuneration and incentives of executives, prescribed officers and non-executive directors of state-owned companies. Refer to the remuneration section of the integrated report for an overview of the main provisions of Eskom’s remuneration policies for non-executive directors and executives. Executive remuneration includes short-term and long-term incentive schemes which are aligned to Eskom’s environmental, social and governance framework. Short-term bonuses and long-term performance awards are linked to the achievement of individual and organisational performance objectives, subject to defined gatekeepers, which include environmental, social and governance-related metrics and targets outlined in the corporate plan and shareholder compact. The details of the Board (governing body) and executive management remuneration are included in this note for the period of time served on the Board or as members of Exco during the period under review. 50.1 Executive directors and management The remuneration of the group chief executive and the chief financial officer (executive directors) and Exco members (executive management) are disclosed below. The members of Exco are regarded as Eskom’s prescribed officers. The group chief executive has a fixed-term contract. The chief financial officer and executive management have permanent contracts based on Eskom’s standard conditions of service, except for one member who is on a three-year fixed-term contract until 31 October 2027. 114 The emoluments for the executive directors and management were as follows: Name Salary Short- Other Long- Total Cash value Prior year Total cash term payments term remuneration earned, not cash value value of bonus bonus earned yet paid earned paid remuneration R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000 2026 Executive directors 15 902 4 504 5 292 – 25 698 – – 25 698 DL Marokane1 9 542 2 499 142 – 12 183 – – 12 183 C Cassim1,2,3,4 6 360 2 005 5 150 – 13 515 – – 13 515 Executive management 40 698 15 942 1 544 1 246 59 430 (16 487) 5 989 48 932 ML Bala 2,5 1 910 352 51 – 2 313 – 2 179 4 492 RA Crookes 4 452 1 589 83 – 6 124 (1 589) – 4 535 NY Hadebe 4 346 1 956 120 – 6 422 (1 956) – 4 466 CB Hartley 4 240 1 376 112 – 5 728 (1 376) – 4 352 A Mlambo6 2 006 – 176 – 2 182 – – 2 182 PB Mngomezulu 4 346 1 956 214 – 6 516 (1 956) – 4 560 RP Mnisi 4 558 1 760 143 – 6 461 (1 760) – 4 701 BJ Nxumalo2 6 148 3 116 428 1 246 10 938 (4 013) 2 153 9 078 SM Scheppers7 – – – – – – 1 657 1 657 AE Seema 4 346 1 956 136 – 6 438 (1 956) – 4 482 LM de Villiers 4 346 1 881 81 – 6 308 (1 881) – 4 427 56 600 20 446 6 836 1 246 85 128 (16 487) 5 989 74 630 2025 Executive directors 15 000 1 211 2 601 – 18 812 – – 18 812 DL Marokane 9 000 765 1 963 – 11 728 – – 11 728 C Cassim 6 000 446 638 – 7 084 – – 7 084 Executive management 35 457 7 282 7 775 – 50 514 (5 989) – 44 525 ML Bala 5 800 2 610 121 – 8 531 (2 179) – 6 352 FS Burn 2 293 – 64 – 2 357 – – 2 357 RA Crookes 1 750 – 37 – 1 787 – – 1 787 NY Hadebe 1 708 – 24 – 1 732 – – 1 732 CB Hartley 333 – 4 – 337 – – 337 PB Mngomezulu 1 708 – 32 – 1 740 – – 1 740 RP Mnisi 717 – 29 – 746 – – 746 SJ Mthembu 1 750 – 38 – 1 788 – – 1 788 BJ Nxumalo 5 800 2 584 208 – 8 592 (2 153) – 6 439 EM Pule 1 174 – 6 412 – 7 586 – – 7 586 J Sankar 1 611 – 202 – 1 813 – – 1 813 SM Scheppers 5 800 2 088 296 – 8 184 (1 657) – 6 527 AE Seema 1 367 – 34 – 1 401 – – 1 401 NN Sithole 1 070 – 12 – 1 082 – – 1 082 V Tuku 715 – 185 – 900 – – 900 S Vezi 153 – 44 – 197 – – 197 LM de Villiers 1 708 – 33 – 1 741 – – 1 741 50 457 8 493 10 376 – 69 326 (5 989) – 63 337 Salaries Salaries consist of a guaranteed package that includes Eskom's medical and pension fund contributions. No fees were paid to executives who serve on the boards of Eskom subsidiaries. Other payments Other payments include accumulated leave paid out, separation payments, long service awards and expenditure relating to telephones, security allowances, operating vehicles, professional subscriptions, spouse funeral and dreaded disease cover as well as ad hoc payments to the pension fund. Bonuses Short-term bonus Executives in the employment of Eskom for six months or longer during a particular financial year qualify for a short-term bonus. The short-term bonus is payable after the conclusion of the year end external audit and approval of performance results. The group chief executive officer and chief financial officer payouts are dependent on ministerial approval. The bonus provision disclosed in note 27 includes an estimated bonus payout for the executive directors and managers disclosed in this note. 1. The short-term bonuses for the group chief executive officer and chief financial officer are subject to ministerial approval. Approval for the 2025 bonus was obtained in September 2025. Approval for the 2026 bonus is outstanding. 2. Short-term bonus includes employer pension contributions relating to prior year bonuses paid. 3. Other payments include R4.8 million paid to the EPPF to augment the retirement benefit for pensionable service lost during fixed‑term employment (2018 to 2023) resulting in approximately three years and two months of pensionable service being added in accordance with the fund rules. 4. The chief financial officer long-term bonus for 2026 is subject to ministerial approval. 5. Member of Exco until 30 September 2025. Seconded to NTCSA as chief executive officer from 1 August 2025 and subsequently appointed as chief executive officer of NTCSA from 1 October 2025. 6. Member of Exco from 1 August 2025. 7. Retired from Eskom in December 2025. 115 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 50. Remuneration of directors and executives (continued) 50.1 Executive directors and management (continued) Bonuses (continued) Long-term bonus Long-term incentive scheme The long-term incentive scheme rewards eligible Exco members in cash for the achievement of organisational objectives measured over a three-year period. Performance awards with a vesting period of three years from the date of grant are awarded to eligible Exco members at the beginning of a financial year. Vesting of the performance awards are conditional on the scheme participant remaining employed by Eskom throughout the vesting period. The award lapses if employment ceases during the vesting period (other than for circumstances permitted under the scheme rules). The performance awards are linked to financial and non-financial key performance indicators that are aligned with Eskom’s corporate plan and Shareholder Compact. Each performance measure has a defined threshold, target and stretch performance levels. Awards only vest only to the extent that the applicable performance and vesting conditions are achieved. Potential vesting percentages range from 0% to 100% with the final vesting percentage capped in accordance with the limits implemented by the Minister of Electricity and Energy. The performance measures included the following: • loadshedding • EBITDA • debt relief conditions • Just Energy Transition • audit findings relating to internal controls • unbundling The Human Capital and Remuneration Committee reviews the performance outcome at the end of the three-year performance and vesting period and recommends the vesting outcome and related payment to the Board for approval. The Board retains discretion to adjust the vesting outcome, notwithstanding the level of performance achieved. Each notional performance award has a deemed value of R1 at the grant date. The value of the award is adjusted over the vesting period using an applicable money market-related rate. Actual performance against each measure is assessed at the end of the performance period against the predetermined threshold, target and stretch levels. The outcome for each measure is then applied to its approved weighting. The weighted outcomes are aggregated to determine the final performance-based vesting percentage, subject to the applicable scheme conditions and any discretion adjustment applied by the Board. Performance awards vested The performance awards for Grant 13 that was granted on 1 April 2023 vested on 31 March 2026. The performance outcome resulted in a vesting of 66.67% which was then capped in line with the limits determined by the Minister of Electricity and Energy. Performance awards vested on 31 March 2026: Long-term bonus payable R’000 C Cassim1 – ML Bala 2 1 246 BJ Nxumalo 1 246 2 492 Performance award vesting The vesting values of the outstanding performance awards at 31 March 2026 and 31 March 2025 respectively were as follows: Name Awarded on 1 April 2025 (Grant 15) Awarded on 1 April 2024 (Grant 14) Outstanding Performance Performance Outstanding Performance Performance performance awards vesting awards payable performance awards vesting awards payable awards vesting on 31 March 2028 on 31 August 2028 awards vesting on 31 March 2027 on 31 August 2027 on 31 March 2028 at a rate of 30% at R1.27 per award on 31 March 2027 at a rate of 50% at R1.27 per award Number Number R’000 Number Number R’000 DL Marokane3 18 000 000 9 000 000 11 430 18 000 000 9 000 000 11 430 C Cassim 6 000 000 1 800 000 2 286 6 000 000 3 000 000 3 810 ML Bala4 – – – 3 397 170 1 698 585 2 157 RA Crookes 4 452 000 1 335 600 1 696 – – – NY Hadebe 4 346 040 1 303 812 1 656 – – – CB Hartley 4 240 050 1 272 015 1 615 – – – PB Mgomenzulu 4 346 040 1 303 812 1 656 – – – RP Mnisi 4 558 050 1 367 415 1 737 – – – BJ Nxumalo 6 148 050 1 844 415 2 342 3 397 170 1 698 585 2 157 SM Scheppers – – – 3 397 170 1 698 585 2 157 AE Seema 4 346 040 1 303 812 1 656 – – – 56 436 270 20 530 881 26 074 34 191 510 17 095 755 21 711 Reconciliation of performance awards movements of long-term incentive plan 2026 2025 Number Number Outstanding at beginning of the year 50 383 020 16 191 510 Granted during the year to Exco members 56 436 270 34 191 510 Granted during the year to others 9 858 090 – Forfeited during the year 5 (6 794 340) – Vested during the year (12 794 340) – Outstanding at end of the year 6 97 088 700 50 383 020 Carrying amount of liability (R’000) 6 45 435 28 089 1. The chief financial officer long-term incentive award for 2026 is subject to ministerial approval. 2. Member of Exco when the long-term incentive awards were granted and during the vesting period. 3. Achievement of target performance results in a 50% vesting outcome for the group chief executive officer for Grant 15. 4. Member of Exco until 30 September 2025. Seconded to NTCSA as chief executive officer from 1 August 2025 and subsequently appointed as chief executive officer of NTCSA from 1 October 2025. 5. Performance awards awarded to Mr SM Scheppers for Grant 13 and Grant 14 were forfeited on 31 December 2025 when he retired from Eskom. 6. Relates to performance awards for the group which includes Exco members as well as Mr ML Bala and Mr SJ Mthembu. 116 Housing and other loans Housing and other loans to Exco members were as follows: 2026 2025 R’000 R’000 C Cassim 2 514 2 663 ML Bala – 2 266 DL Marokane 7 432 7 868 A Mlambo 1 754 – AE Seema 248 – 11 948 12 797 Housing and other loan balances are disclosed when an individual is in the role of an executive director or management at financial year end. The interest rate on housing loans from EFC at 31 March 2026 was 8.5% (2025: 9.25%). The loans are repayable over a maximum period of 30 years and the terms and conditions applicable to ex-employees are applied on resignation. The interest rate on the loan to Mr AE Seema from EFC was 17% with a maturity date of 31 December 2032. 50.2 Non-executive directors Non-executive directors receive compensation in the form of a fixed monthly retainer fee and per-meeting attendance fees, capped in accordance with the shareholder-approved annual meeting calendar. Meeting attendance fees are paid on a quarterly basis. The fees applicable for the year were as follows: 2026 2025 R’000 R’000 M Nyati 2 811 2 724 FBB Abdul Gany1 1 857 2 352 AJ Barendse2 611 – EK Chiloane2 495 – LL Goqwana 1 948 1 775 SN Govind2 640 – APZ Mafuleka1 1 395 1 832 DC Matshoga 2 553 – L Mkhabela1 1 568 1 832 TL Mthombeni 2 496 1 832 TP Nchocho2 640 – B Ntshalintshali1 1 481 1 775 JV Peach2 495 – T Ramano1 1 453 2 006 CR le Roux 2 496 2 237 BS Tshabalala 2 582 – CB Vilakazi 2 237 1 832 C Von Eck1 1 655 2 199 TP Zondi-Mthembu3 669 – 26 082 22 396 The following Board members serve as directors on the Board of subsidiary companies. Fees for the year for the attendance of meetings were as follows: Escap SOC Ltd4 APZ Mafuleka 1 230 188 L Mkhabela 1 091 130 2 321 318 National Transmission Company South Africa SOC Ltd 5 LL Goqwana6 – – T Ramano1 531 1 073 CB Vilakazi 1 096 1 104 1 627 2 177 1. Term ended on 30 November 2025. 2. Appointed from 1 December 2025. 3. Appointed from 5 December 2025. 4. Fees paid directly to Board member. 5. Fees paid by Eskom and subsequently recovered from NTCSA. 6. Appointed on 29 January 2026 with effective participation on the NTCSA board commencing on 1 April 2026. 117 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 51. New standards and interpretations 51.1 Standards, interpretations and amendments to published standards that are not yet effective The following new standards, interpretations and amendments to existing standards have been published that are applicable for future accounting periods that have not been adopted early by the group. These standards and interpretations will be applied in the first year that they are applicable to the group which is the financial period beginning on or after the effective date. Topic Summary of requirements Impact Classification and The amendments specify: No impact on the group as measurement of financial • when a financial liability settled through an electronic payment system can be f inancial liabilities are instruments – amendments deemed to be discharged before the settlement date derecognised on settlement to IFRS 9 and IFRS 7 • how to assess the contractual cash flow characteristics of financial assets with date and there are no equity (1 January 2026) contingent features when the nature of the contingent event does not relate instruments designated at fair directly to changes in basic lending risks and costs value through other comprehensive income or • new or amended disclosure requirements relating to investments in equity f inancial assets with instruments designated at fair value through other comprehensive income and contingent features. financial instruments with contingent features that do not relate directly to basic lending risks and costs These amendments have to be applied prospectively. Contracts referencing The amendments provide guidance on: No impact on the group’s nature-dependent electricity • the own-use exemption for purchasers of electricity under such power purchase recognition or measurement – amendments to IFRS 9 agreements as existing power purchase and IFRS 7 • hedge accounting requirements for companies that hedge their purchases or agreements are for own use (1 January 2026) sales of electricity using power purchase agreements and not designated for hedge • new disclosure requirements relating to contracts for nature-dependent accounting. Disclosure will be electricity with specified characteristics updated where applicable. These amendments have to be applied prospectively. Annual improvements The amendments include the following: No impact on the group as volume 11 – amendments to • IFRS 1: clarifies hedge accounting wording inconsistencies with IFRS 9 the amendments primarily IFRS 1 First-time Adoption of • IFRS 7: aligns the terminology and concepts with IFRS 13 Fair Value relate to clarification and International Financial Measurement and updates the implementation guidance to simplify aspects of consistency in terminology. Reporting Standards, IFRS 7, the requirements that are not illustrated IFRS 9, IFRS 10 Consolidated • IFRS 9: updates cross-references for derecognition of lease liabilities and aligns Financial Statements and terminology with IFRS 15 IAS 7 Statement of Cash Flows • IFRS 10: clarifies inconsistencies relating to judgement when determining (1 January 2026) whether a party is acting as a de facto agent • IAS 7: replaces ‘cost method’ with ‘at cost’ for consistency with IFRS Accounting Standards These amendments have to be applied retrospectively. IFRS 18 Presentation and IFRS 18 will replace IAS 1 Presentation of Financial Statements while carrying The group is assessing the Disclosure in Financial forward many of the requirements in IAS 1 and introduces new requirements impact of the presentation Statements relating to: requirements. A focused (1 January 2027) • presentation of specified categories and defined subtotals in the statement of implementation initiative is profit or loss planned to start during the • disclosures on management-defined performance measures in the notes to the 2027 financial year to evaluate financial statements the impact of the • improved aggregation and disaggregation requirements and implement required changes to enable Some of the requirements in IAS 1 moved to IAS 8 Accounting Policies, Changes the group to report in terms in Accounting Estimates and Errors and IFRS 7. of the requirements of the standard. Fair value option – The amendments clarify which investments in associates and joint ventures are No impact as the group’s amendments to IAS 28 eligible for the fair value option in IAS 28, including investments held by venture investments in associates and Investments in Associates capital organisations, mutual funds, unit trusts or other similar entities whose main joint ventures do not qualify and Joint Ventures business activity is investing in particular types of assets as described in for the fair value option in (IFRS 18 first apply) paragraph 49(a) of IFRS 18. IAS 28. These amendments have to be applied retrospectively. Translation to a The amendments specify how to translate financial information when there is a No impact as the group has hyperinflationary mismatch between hyperinflationary and non-hyperinflationary functional and no hy pe r inf lationar y presentation currency – presentation currencies with additional disclosure requirements for foreign functional or presentation amendments to IAS 21 operations affected by the translation approach. currencies. The Effects of Changes in Foreign Exchange Rates These amendments have to be applied retrospectively. (1 January 2027) 118 Topic Summary of requirements Impact IFRS 20 Regulatory Assets IFRS 20 specifies how to account for regulatory assets and liabilities and the The group will review the and Regulatory Liabilities resulting regulatory income and expense arising from a regulatory agreement. requirements to determine (1 January 2029) the extent to which A regulatory asset is an enforceable present right to add an amount when enforceable rights or determining a regulated rate to be charged to customers in future periods. obligations in terms of its A regulatory liability is an enforceable present obligation to deduct an amount regulatory agreements give when determining a regulated rate to be charged to customers in future periods. rise to regulatory assets and A regulatory asset or liability is recognised when a regulatory agreement creates liabilities. A focused initiative an enforceable present right or obligation and a timing difference exists because will follow to evaluate the part or all of the total allowed compensation for regulated goods or services impact of the requirements supplied in one period is included in revenue recognised under IFRS 15 in a different and implement the necessary period. Movements in regulatory assets and liabilities give rise to regulatory income changes in terms of the and expense. standard. The standard supplements information provided by applying IFRS 15 and supersedes IFRS 14 Regulatory Deferral Accounts. IFRS 20 must be applied either retrospectively or using the modified retrospective approach. Sale or contribution of The amendments address the conflict between the guidance on consolidation and No impact as the group is assets between an investor equity accounting when a parent loses control of a subsidiary in a transaction with currently not disposing of any and its associate or joint an associate or joint venture. The amendments require that the full gain be investments in associates or venture – amendments to recognised when the assets transferred meet the definition of a business under joint ventures. IFRS 10 and IAS 28 IFRS 3 Business Combinations. (optional adoption, effective date deferred indefinitely) 51.2 Standards, interpretations and amendments to published standards that are effective and applicable to the group Topic Summary of requirements Impact Lack of exchangeability – The amendments specify how to assess whether a currency is exchangeable and No impact on the group as all amendments to IAS 21 how to determine the exchange rate when it is not. The amendments clarify: foreign currency transactions (1 January 2025) • when a currency is exchangeable into another currency are exchangeable. • how a company estimates a spot rate when a currency lacks exchangeability • the disclosure requirements for users to understand the impact of the currency not being exchangeable These amendments have to be applied retrospectively. Disclosures about The amendments provide additional illustrative examples to enhance disclosure The group considered the uncertainties in the financial about uncertainties in the financial statements and do not introduce new guidance in the illustrative statements – amendments requirements. The examples demonstrate the application of disclosure requirements examples and enhanced to illustrative examples to relating to material judgements, estimation uncertainty, disaggregation of disclosure where applicable. IFRS 7, IFRS 18, IAS 1, IAS 8, information and credit risk. Uncer tainties, including IAS 36 and IAS 37 Provisions, environmental and climate- Contingent Liabilities and related matters, were Contingent Assets considered in the preparation (Effective immediately) of the financial statements. Related disclosures, including judgements, estimates and assumptions applied, were included in the relevant notes where material. 119 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 52. Information required by the Public Finance Management Act Section 55(2)(b)(i) of the PFMA requires that the particulars of any irregular expenditure, any fruitless and wasteful expenditure as well as material losses due to criminal conduct be disclosed in the annual financial statements and annual report (integrated report). The National Treasury Instruction 4 of 2022/23 on the PFMA Compliance and Reporting Framework was applied in this regard when compiling the disclosure in the annual financial statements and integrated report. The instruction applies to all departments, trading entities, constitutional institutions and public entities listed in Schedules 2 and 3 to the PFMA. The instruction note requires that detailed information be reported in the integrated report and only expenditure relating to the current and comparative financial years be reported in the annual financial statements. The instruction note further requires reporting inclusive of VAT. However, National Treasury has granted Eskom a departure from this requirement in terms of section 79 of the PFMA. Eskom has historically reported all amounts excluding VAT and has continued to do so for the 2026 financial year therefore, all amounts disclosed in this note exclude VAT. In addition to the annual disclosure provided in the financial statements and integrated report, the group reports quarterly to National Treasury on current and historical irregular expenditure and fruitless and wasteful expenditure that has not been fully addressed as required. 52.1 Irregular expenditure Irregular expenditure is defined as expenditure, other than unauthorised expenditure, incurred in contravention of or that is not in accordance with a requirement of any applicable legislation. The scope includes transgressions of any laws and regulations regardless of whether or not the expenditure was justified from a business perspective, value was received, the breaches were deliberate or accidental or the breaches happened unknowingly or in good faith. Irregular expenditure is incurred when the related transaction is recognised in terms of IFRS Accounting Standards. The cumulative balance of the irregular expenditure is reduced in terms of the Irregular Expenditure Framework when: • transactions which encompass value for money are regularised through condonement by National Treasury or • if not condoned, an application for removal of the transaction was approved by the Accounting Authority and/or • losses on the transaction have been recovered or written off per Eskom’s internal policies 2026 2025 Current Previously Prior year Restated year reported error Note Rm Rm Rm Rm Group PFMA 628 711 776 1 487 Use of sole or single source (a) – 1 – 1 Incorrect classification as emergency or urgent procurement (b) – – 1 1 Tender processes not adhered to and insufficient delegation of authority (c) 628 708 775 1 483 Modifications exceeding allowed amounts (d) – 2 – 2 PPPFA 3 215 190 1 173 1 363 Incorrect tender process applied (e) 390 – 251 251 Tax non-compliance (f ) 2 825 183 922 1 105 Designated sectors (g) – 7 – 7 CIDB regulations Contracts awarded without following CIDB requirements (h) 13 – 40 40 Various commercial requirements Breach of more than one legislative requirement (i) 972 561 7 324 7 885 Other 79 75 24 99 4 907 1 537 9 337 10 874 Company PFMA 92 583 127 710 Use of sole or single source (a) – 1 – 1 Tender processes not adhered to and insufficient delegation of authority (c) 92 580 127 707 Modifications exceeding allowed amounts (d) – 2 – 2 PPPFA 3 215 190 1 173 1 363 Incorrect tender process applied (e) 390 – 251 251 Tax non-compliance (f ) 2 825 183 922 1 105 Designated sectors (g) – 7 – 7 CIDB regulations Contracts awarded without following CIDB requirements (h) 10 – 24 24 Various commercial requirements Breach of more than one legislative requirement (i) 132 425 6 810 7 235 Other 76 75 9 84 3 525 1 273 8 143 9 416 120 (a) Use of sole or single source Irregular expenditure arose from non‑compliance with National Treasury limited bidding requirements of sole and/or single source procurement, where the criteria and/or approvals supporting limited bidding were not appropriately met prior to contract award, contrary to procurement prescripts giving effect to fair, equitable, transparent, competitive and cost‑effective procurement. (b) Incorrect classification as emergency or urgent procurement Irregular expenditure was incurred where procurement processed as emergency and/or urgent but did not meet prescribed requirements, including incorrect classification or insufficient justification prior to award, contrary to applicable National Treasury Supply Chain Management prescripts. (c) Tender processes not adhered to and insufficient delegation of authority Irregular expenditure arose where prescribed tender processes and/or delegated approval requirements were not complied with, including instances where evaluation or adjudication criteria were not applied as communicated and/or approvals were not appropriately authorised, contrary to PFMA section 51(1)(a)(iii) and procurement prescripts. This category includes instances of order splitting or threshold circumvention identified through audit procedures and data analytics. (d) Modifications exceeding allowed amounts Irregular expenditure was incurred where contract modifications or variations were implemented without meeting applicable approval requirements and/or prescribed thresholds in the relevant National Treasury instructions. (e) Incorrect tender process applied Irregular expenditure was incurred where preferential procurement requirements were not applied correctly, including instances where preferential evaluation methodologies (eg preference points or threshold application) were not applied as prescribed by the Preferential Procurement Policy Framework Act, 5 of 2000 (PPPFA) or Preferential Procurement Regulations and related prescripts. (f) Tax non-compliance Irregular expenditure was incurred where supplier tax compliance requirements were not satisfied at the point of award approval (ie compliance was not appropriately verified as compliant prior to award), contrary to applicable National Treasury Supply Chain Management instructions. (g) Designated sectors Irregular expenditure was incurred where designated sector or local production and content requirements were not complied with, including cases where minimum thresholds were not appropriately specified and/or validated in tender documents, contrary to designated sector and local content prescripts. (h) Contracts awarded without following CIDB requirements Irregular expenditure was incurred where procurement awards did not comply with applicable Construction Industry Development Board (CIDB) regulatory requirements that are directly linked to award legality and prescribed eligibility or compliance conditions. (i) Breach of more than one legislative requirement Irregular expenditure was recorded where individual transactions involved two or more multiple contraventions of applicable prescripts and were therefore classified as breaches of more than one legislative requirement. The restatement resulted from irregular expenditure incurred in prior periods where the assessment and determination of the errors were only finalised and adjusted for in the current year. Most of the amounts relates to contracts which were awarded or modified without proper approvals. 52.2 Fruitless and wasteful expenditure Fruitless and wasteful expenditure is expenditure made in vain that could have been avoided had reasonable care been exercised. Fruitless and wasteful expenditure is reported in the annual financial statements when it is confirmed. 2026 2025 Current Previously Prior year Restated year reported error Rm Rm Rm Rm Group Interest and penalties – 8 – 8 Other – 12 3 15 – 20 3 23 Company Other – 12 3 15 The group experienced 62 (2025: 57 restated) and the company 24 (2025: 44 restated) incidents of fruitless and wasteful expenditure during the year. 121 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 52. Information required by the Public Finance Management Act (continued) 52.3 Criminal conduct Material losses caused by criminal conduct and any disciplinary, civil or criminal action taken in respect of such losses are reported in terms of the significance and materiality framework as agreed upon with the shareholder representative. Incidents that exceeded the materiality threshold individually or as a type of closely related items are disclosed. Group Company Note 2026 2025 2026 2025 Losses incurred (Rm) Estimated non-technical energy losses (a) 6 599 7 068 6 599 7 068 Theft of conductors, cabling and network-related equipment (b) 86 77 79 64 Malicious damage to property (b) – 77 – 75 Fraud and corruption (c) 8 4 8 4 Common theft (b) 28 – 26 – Armed robbery (b) 26 – 21 – 6 747 7 226 6 733 7 211 Losses recovered (Rm) Estimated non-technical energy losses1 (a) 55 59 55 59 Theft of conductors, cabling and network-related equipment (b) 1 5 1 2 Malicious damage to property (b) – 2 – 2 Fraud and corruption (c) – 2 – 2 Common theft (b) 5 – 5 – Armed robbery (b) 1 – 1 – 62 68 62 65 Number of criminal incidents where direct financial losses were incurred Theft of conductors, cabling and network-related equipment (b) 1 333 1 585 1 200 1 425 Malicious damage to property (b) – 261 – 177 Fraud and corruption (c) 3 4 3 4 Common theft (b) 192 – 167 – Armed robbery (b) 57 – 46 – 1 585 1 850 1 416 1 606 Number of arrests Estimated non-technical energy losses 28 7 28 7 Theft of conductors, cabling and network-related equipment 95 73 90 66 Malicious damage to property – 16 – 14 Fraud and corruption 3 – 3 – Common theft 19 – 15 – Armed robbery 5 – 5 – 150 96 141 87 (a) Estimated non-technical energy losses Non-technical energy losses relate to losses due to electricity theft through illegal connections, tampering and bypassing of electricity meters as well as the purchase of electricity tokens from unregistered or illegal vendors. These challenges also include illegal connections to transformers which are being investigated and monitored as part of ongoing management and mitigation efforts. The management of non-technical losses focuses on ensuring that all energy supplied is accounted for including initiatives to minimise non-technical energy losses. Non-technical energy losses are determined by applying a scientific approach to measure total energy losses as the difference between energy produced and energy sold. Technical energy losses are derived based on known factors of the electrical grid such as conductor resistance, transformer and equipment losses. The residual of losses is attributed to non-technical losses and occur over a 24-hour period and is therefore seen to be baseload (coal-fired) orientated as the power stations are designed to respond to consumption patterns. The measurement of losses is therefore based on the variable cost of coal-fired stations that include coal and water usage as well as environmental levy costs. Other coal production costs are excluded as they are not directly related to energy sent out. The production cost of peaking plant, including OCGTs, are excluded as they are normally only operated during periods of peak demand. The reported losses represent the estimated cost of non-technical energy lost. The technical losses computation within the energy losses model was enhanced during the year. Historical averages and proxy assumptions were updated and refined with actual network modelling data and validated high voltage technical loss case files, resulting in a more representative estimation of technical losses across the network. Total energy losses were as follows: 2026 2025 % GWh % GWh Technical 3.52 6 580 2.86 5 644 Non-technical 7.02 13 120 7.55 14 881 Eskom invoiced R11.8 million (2025: R8.4 million) of revenue relating to non-technical energy losses during the year, of which R4.8 million (2025: R5.5 million) has been received. In addition, meter tampering fees amounting to R50.2 million (2025: R53.0 million) were received during the year. The risk that non-technical energy losses could increase in the future because of the investigations that uncovered the bulk generation of illegal prepaid tokens on Eskom’s online vending system in 2024 remain even though improvements were implemented in the online vending environment during the year. Refer to note 45.2. 1. Estimated non-technical energy losses were restated to only report recoveries of losses due to criminal conduct (R59 million) instead of all losses recovered (R324 million) as previously erroneously reported. 122 (b) Theft of network-related equipment, malicious damage to property and common theft Theft of network-related equipment includes theft of cable (including airdac cable), batteries, tower members and transformers. Unlawful and intentional damage to property belonging to another is reported as malicious damage to property. Vandalism is the action involving deliberate destruction of or damage to public or private property. Damage towards any property without permission of the owner is reported as vandalism. The losses incurred in this category were below the materiality threshold in 2026. Common theft consists of the unlawful appropriation of moveable property belonging to another with intent to permanently deprive the owner of the property. Property includes laptops, tools, cell phones, equipment, air-conditioners and all other items not included in the Eskom list of essential infrastructure or security crime categories. The losses incurred in this category were below the materiality threshold in 2026. Armed robbery is an aggravated form of theft that involves the use of lethal weapons to perpetrate violence or the threat of violence (intimidation) against a victim. A threat to inflict grievous bodily harm by the offender or an accomplice on the occasion when the offence is committed, whether before or during or after the commission of the offence. The losses incurred in this category were below the materiality threshold in 2026. Actions to combat losses through criminal conduct are managed in collaboration with other affected state-owned companies, industry role players, the National Prosecuting Authority and South African Police Service, including: • realigning of security contracts and optimisation of deployment, including scope, resourcing, and deployment models to enhance effectiveness and responsiveness • improving of the Eskom asset disposal process and strategies • focusing on asset management and protection including researching and implementation of innovative solutions, ie unique marking and tracking capabilities • implementing national policy and legislative directives to address scrap and second-hand good market regulation which fuels the demand for illicit goods • introducing integrated, intelligent and smart security technologies and systems to reduce dependence on the human factor such as use of drones, intelligent cameras and alarm systems • implementing focused strategies and projects on revenue losses – metering, vending, tampering, disruptive operations, etc • minimising breaches that allow easy access to sites and assets by improving housekeeping, appropriate storing of material and equipment with well-functioning delay and deterring solutions to prevent or minimise impact • deploying robust security systems that can detect and prevent crime and provide evidence that can be used for disciplinary or criminal processes • ensuring consistent and continuous screening and vetting of contractors and staff to prevent and minimise insider threat involvement and collusion • strengthened law enforcement collaboration, including arrests, case development and investigative support to ensure quality dockets that increase the likelihood of successful prosecutions and convictions • strengthened internal communication through clear, forward-looking view of security threats, enabling proactive operational and leadership decision (c) Fraud and corruption Eskom concluded 3 (2025: 4) investigations into fraud during the year where losses due to criminal conduct were incurred. The internal control measures in the affected areas have been reviewed and enhancements recommended to the accountable line managers for implementation. This includes controls, disciplinary, criminal and civil proceedings against those involved. 123 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 53. Reportable irregularities and matters under investigation 53.1 Reportable irregularities The external auditors raised certain reportable irregularities in terms of section 45 of the Auditing Profession Act, 26 of 2005. Progress was made in clearing these reportable irregularities. The table below reflects the status of the reportable irregularities at 31 March 2026. The discussion focused on items that were open at the previous year end and new items identified in the current year. Description Response Status 1. Eskom failed to effect corrective actions for • The continued implementation of the emission reduction strategy Open, pending identified non-compliance to NEMA, National through the Generation Reliability and Optimisation Plan has led to a implementation Water Act, 36 of 1998 (NWA) and National significant improvement in the condition and reliability of the coal-fired of action items Environmental Management: Air Quality Act, power stations. 39 of 2004 (NEM: AQA) at multiple power • An integrated approach including improved governance, performance stations, including non-compliance relating to: management, skills development and detailed operational plans has • section 31L of NEMA been implemented to address environmental risks and the root causes • sections 19, 20, 21, 22, 53, 118, 120 and 121 of non-compliance with environmental legislation. of NWA • Incidents of environmental non-compliance are reported to the • section 51(1)(e) of NEM: AQA relevant authorities and investigations are undertaken to ensure that Notices have been issued by the relevant appropriate corrective and preventative measures are put in place. authorities for some of these non-compliances, Progress against identified actions is monitored and reported through resulting in a risk of sanctions from the various governance structures, including the Generation Environmental authorities as well as litigation for continued Compliance Steering Committee, with ongoing tracking at power non-compliance. station, divisional and executive management levels. • Creating awareness of environmental legal accountability, supported These breaches led the auditors to believe the through online legal liability training and new SHEQ training to non-compliance with NEMA, NWA and strengthen leadership accountability and support improved compliance. NEM:AQA represents material breaches of the • Progress has been made in addressing water use licence compliance fiduciary duties of the directors of the company. matters, including receipt of an amended water use licence from Reported: 2021–2026 the Department of Water and Sanitation during March 2026 and implementation of additional monitoring and remediation measures. Certain actions remain in progress, including the revision of toxicity testing requirements. • The implementation of actions in response to the generation division strategic water implementation plan, which aims to address the root causes that resulted in unlawful water overflows, continues. Progress is reported at the relevant management and committee levels. • Implementation of emission reduction strategies and dust-handling improvements is tracked through the generation recovery system to support ongoing compliance. • The implementation of the air quality plan continues and includes key objectives to: – Minimise the impact of Eskom’s emissions on human health and the natural environment. – Maintain Eskom’s licence to operate by ensuring compliance with air quality legislation, including power station atmospheric emission licences and minimum emission standards. – Minimise financial and legal liabilities associated with emissions and non-compliance to legislation. – Support Eskom’s Just Energy Transition with regards to a transition from the existing dependence on fossil fuels towards a mix of energy sources for electricity generation. 124 Description Response Status 2. Certain duties relating to investigations have • All investigations that reveal suspected fraud and corruption are Closed not been fulfilled including: referred to the Directorate for Priority Crime Investigation PRECCA office. The PRECCA reference numbers are included in the forensic • Contravention with the requirements of investigation reports. National Treasury regulation section 33.1.2 • The group investigation and security division was established to enhance as there were delays within the investigative and centralise the forensic investigation function and strengthen functions of the organisation in initiating oversight, monitoring and reporting of investigations. and finalising forensic investigations and allegations of misconduct of individuals in • The recruitment of resources to address vacancies continues to key roles. address the delay in initiating and finalising investigations and enable a quicker response to identified incidents of fraud, corruption, and • Management did not meet its fiduciary duty financial irregularities. requirements as delays in investigations will impact Eskom’s ability to mitigate any • The contract for the current forensic panel was extended while the possible future exposures to financial losses procurement process for a new forensic panel is being finalised. The and effective consequence management. establishment of the new forensic panel is at an advanced stage with implementation planned from October 2026. • The accounting authority was, as a result, not in a position to confirm that all • A special project has been initiated to reduce the backlog of forensic relevant matters are reported in terms investigations, supported by dedicated external resources. of section 34(1) of the Prevention and • Priority forensic investigations are referred to the rapid response team Combating of Corrupt Activities Act, 12 of for immediate attention, investigation and resolution. 2004 (PRECCA). • The project management office continues to support the forensic function through the review of forensic reports. Reported: 2022–2025 • A key performance indicator has been implemented which makes it a requirement for investigations to commence within 60 calendar days of completion of preliminary assessments with ongoing monitoring against this indicator. • The current case management system is being replaced to enhance efficiency. • Processes and relationships with law enforcement agencies continue to be strengthened to support effective reporting, law enforcement referrals and the investigation of fraud and corruption. 3. Certain financial records were not complete • Management implemented several corrective actions to strengthen Closed or accurately maintained in line with legislative PFMA reporting controls, improve completeness and accuracy of requirements of the PFMA and Companies financial records and enhance governance over PFMA related reporting Act, including: and disclosures. • An effective system of internal controls was • All procurement documentation was centrally loaded and reviewed not implemented to ensure that registers for completeness. Progress, limitations and solutions were monitored used for disclosure in the annual financial on a weekly basis and progress reports provided to Exco, the Audit statements were accurate and complete Committee and Board. with full and proper supporting records. • Governance oversight was strengthened through the audit recovery • Certain information could not be provided programme with periodic reporting to Exco, the Audit Committee and by management to the auditors which National Treasury. resulted in scope limitations. • Procurement transactions were reviewed for completeness and • Multiple non-compliances of PFMA compliance gaps that required intervention. A self-declaration process (section 51 and 55) and the Companies Act was implemented (where information was not available) to ensure staff (section 28 and 29). accountability. • The inaccurate and incomplete financial • The irregular expenditure register was enhanced by including identified record keeping is a material breach of the potential irregular expenditure through initial assessments resulting fiduciary duties of management. in more complete and accurate reporting of irregular expenditure matters. Reported: 2022–2025 • Detailed analysis of irregular expenditure balances was undertaken to facilitate the closure of matters and the preparation of condonation submissions. • A framework for all tenders above R300 million was developed and approved to support proactive assurance reviews and strengthen procurement governance processes. 125 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Notes to the financial statements continued 53. Reportable irregularities and matters under investigation (continued) 53.1 Reportable irregularities (continued) Description Response Status 4. Investigations into alleged financial misconduct • Consequence management remains a key component of the audit Closed relating to instances of irregular, fruitless and recovery programme with a continued focus to address historical wasteful expenditure and performing the non-compliance with PFMA requirements relating to investigations, necessary disciplinary procedures and disciplinary processes and consequence management. Progress against consequence management was not done the remediation plan is monitored through established governance timeously in line with the PFMA (sections structures. 51(1)(e)(iii), 55(1)(a), 83(1), (2), (3) and (4)) • Capacity constraints in the PFMA and loss control function departments and related treasury regulations (paragraph were addressed through the appointment of external service providers 31.1). This includes: and a phased recruitment process. • Conducting investigations into instances • The loss control function department was restructured to improve of irregular and fruitless and wasteful efficiency, independence of oversight and consistency in the execution expenditure to determine if disciplinary steps of disciplinary and consequence management processes. needed to be taken against liable officials. • A consequence management framework is being finalised to strengthen • Taking disciplinary actions against any the governance of consequence management processes, responsibilities official(s) who made or permitted irregular and outcomes across the organisation. and fruitless and wasteful expenditure • Governance and oversight have been strengthened through regular based on the outcome of investigations. monitoring and reporting including weekly operational monitoring, monthly reporting to Exco and the Audit Committee and quarterly • Providing supporting documentation reporting to National Treasury. Financial misconduct and PFMA-related to confirm that disciplinary steps were matters continue to be escalated through established governance taken against all the officials who made structures to enable effective oversight and timely intervention. or permitted irregular and fruitless and • Various matters where fraud, theft and other related losses have been wasteful expenditure based on the identified are being investigated by the SIU and forensic investigators. outcome of investigations. • Revised disciplinary procedures are being implemented with ongoing • Providing supporting documentation to awareness initiatives and training sessions. confirm that recommendations of completed • A panel of external case disciplinary chairpersons and case presenters disciplinary hearings were implemented. is available to assist with disciplinary procedures. Internal capacity is • Initiate all investigations into alleged enhanced through training of employees to serve as case chairpersons financial misconduct within 30 days of the and case presenters. incidents being reported. • Evaluation of technological solutions to enable automation and flagging Reported: 2022–2025 of non-compliance. 5. Management did not discharge their fiduciary • Management implemented several corrective actions to strengthen Closed duty as they failed to ensure that the entity’s financial reporting controls and improve the quality of financial complete and accurate financial statements reporting for the timely submission of annual financial statements. were submitted to National Treasury and the • The finance business partnering matrix were strengthened to support auditors on 30 May 2025, as required by improved financial reporting disciplines and year end reporting PFMA section 55. The same matter was processes. identified in prior years which highlights that • Key performance indicators relating to the quality and timeliness of there are failures within the financial reporting financial reporting were incorporated into the performance compacts controls which have not been rectified and of group executives to strengthen accountability. put in place as required by PFMA section 51. • The corporate planning and budgeting process was enhanced to facilitate timely completion of year end reporting key deliverables that Reported: 2022–2025 are dependent on this process such as going concern and impairment assessments. • Periodic independent reviews and internal audit validations were performed on key reporting processes to improve accuracy, completeness and reliability of financial information before external audit review. • Ongoing training programmes were undertaken to strengthen technical financial reporting knowledge of PFMA requirements, IFRS Accounting Standards and emerging reporting expectations. • Progress against the audit recovery plan continues to be monitored through the Exco audit recovery forum which reviews the status of remediation actions monthly. 53.2 Matters under investigation There are currently various internal and external investigations being conducted into alleged fraud and malfeasance by current and former Eskom employees as well as external parties. Eskom is working with relevant authorities regarding these matters. 126 Appendix – abbreviations, acronyms and definitions Accounting, audit and other financial terms CAPEX Capital expenditure CGU Cash Generating Unit EAR rule Enhanced Auditor Reporting for the Audit of Financial Statements of Public Interest Entities EBITDA Profit before depreciation and amortisation expense as well as net fair value, foreign exchange gain/(loss) and deferred income amortisation IAS® International Accounting Standard/(s) IFRIC® International Financial Reporting Interpretations Committee IFRS® Accounting Standards International Financial Reporting Standards as issued by the International Accounting Standards Board IRBA Independent Regulatory Board for Auditors IRBA code Independent Regulatory Board for Auditors Code of Professional Conduct for Registered Auditors ISA International Standards on Auditing PPI Producer Price Index R Rand Rm Rand millions VAT Value-Added Tax Accounting standards and interpretations IAS 1 Presentation of Financial Statements IAS 7 Statement of Cash Flows IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors IAS 12 Income Taxes IAS 16 Property, Plant and Equipment IAS 19 Employee Benefits IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 24 Related Party Disclosures IAS 28 Investments in Associates and Joint Ventures IAS 36 Impairment of Assets IAS 37 Provisions, Contingent Liabilities and Contingent Assets IAS 39 Financial Instruments: Recognition and Measurement IFRIC 5 Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds IFRIC 18 Transfers of Assets from Customers IFRS 1 First-time Adoption of International Financial Reporting Standards IFRS 3 Business Combinations IFRS 5 Non-current Assets Held-for-Sale and Discontinued Operations IFRS 7 Financial Instruments: Disclosures IFRS 8 Operating Segments IFRS 9 Financial Instruments IFRS 10 Consolidated Financial Statements IFRS 13 Fair Value Measurement IFRS 14 Regulatory Deferral Accounts IFRS 15 Revenue from Contracts with Customers IFRS 16 Leases IFRS 18 Presentation and Disclosure in Financial Statements IFRS 20 Regulatory Assets and Regulatory Liabilities Currencies CNY Chinese yuan EUR Euro GBP Pound sterling (United Kingdom) JPY Japanese yen NOK Norwegian krone SEK Swedish krona USD United States dollar ZAR South African rand Entities EFC Eskom Finance Company SOC Ltd EPPF Eskom Pension and Provident Fund Escap Escap SOC Ltd Eskom Eskom Holdings SOC Ltd Group Eskom Holdings SOC Ltd and its subsidiaries Motraco Mozambique Transmission Company SARL NEDCSA National Electricity Distribution Company of South Africa SOC Ltd NTCSA National Transmission Company South Africa SOC Ltd Nqaba Nqaba Finance 1 (RF) Ltd ERI Eskom Rotek Industries SOC Ltd 127 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Appendix – abbreviations, acronyms and definitions continued Legislation Companies Act Companies Act, 71 of 2008 King IV TM Report on Corporate Governance for South Africa King V TM Report on Corporate Governance for South Africa (effective from 1 January 2026) NEMA National Environmental Management Act, 107 of 1998 NWA National Water Act, 36 of 1998 NEM: AQA National Environment Management: Air Quality Act, 39 of 2004 PAA Public Audit Act, 25 of 2004 PAJA Promotion of Administrative Justice Act, 2000 PFMA Public Finance Management Act, 1 of 1999 PPPFA Preferential Procurement Policy Framework Act, 5 of 2000 PRECCA Prevention and Combating of Corrupt Activities Act, 12 of 2004 Measures GWh Gigawatt hour kg Kilogram km Kilometre kWh Kilowatt hour kV Kilovolts ℓ Litre MVA Mega volt ampere MW Megawatt MWh Megawatt hour TWh Terawatt hour Other AGSA Auditor-General of South Africa Board Eskom Board of Directors B-BBEE Broad-Based Black Economic Empowerment CA(SA) Chartered Accountant of South Africa CIDB Construction Industry Development Board CSI Corporate Social Investment EAF Energy Availability Factor ERRT Eskom Restructuring Task Team EUF Energy Utilisation Factor Exco Executive Committee IPP Independent Power Producer IT Information Technology JET Just Energy Transition KPI Key Performance Indicator MYPD Multi-Year Price Determination NERSA National Energy Regulator of South Africa OCGT Open Cycle Gas Turbine OVS Online Vending System PCLF Planned Capacity Loss Factor RCA Regulatory Clearing Account SAIDI System average interruption duration index SAIFI System average interruption frequency index SAPS South African Police Service SARS South African Revenue Services SIU Special Investigations Unit STI Short-term Incentive Scheme TMPS Total Measured Procurement Spend UCLF Unplanned Capacity Loss Factor Zondo Commission Judicial Commission of Inquiry into Allegations of State Capture 128 Definitions Cash interest cover ratio Net cash flows from operating activities divided by the aggregate of interest paid and received from financing activities EBITDA Revenue plus other income minus primary energy, employee benefit expense, impairment of financial assets, impairment of other assets and other expenses EBITDA margin EBITDA divided by revenue Free funds from operations Net cash flows from operating activities minus cash flows from changes in working capital Liquid assets Treasury investments plus cash and cash equivalents Net debt Debt securities and borrowings plus lease liabilities plus derivative liabilities held for risk management (used to hedge other items of net debt) minus derivative assets held for risk management (used to hedge other items of net debt) minus payments made in advance (used to secure borrowings raised) minus cash and cash equivalents Net debt service cover Net cash flows from operating activities divided by the aggregate of debt repaid and interest paid and received from financing activities Net profit margin Net profit divided by revenue Working capital current assets Inventories plus payments made in advance (current portion) plus trade and other receivables (current portion) plus taxation asset Working capital current liabilities Trade and other payables (current portion) plus payments received in advance (current portion) plus provisions (current portion) plus employee benefit obligations (current portion) plus taxation liability Working capital ratio Working capital current assets divided by working capital current liabilities Refer to the integrated report for definitions relating to the shareholder compact key performance indicators. 129 ESKOM HOLDINGS SOC LTD Annual Financial Statements 2026 Company information Eskom Holdings SOC Ltd Incorporated in the Republic of South Africa Registration number 2002/015527/30 Registered office Eskom Megawatt Park 2 Maxwell Drive Sunninghill Sandton 2157 PO Box 1091 Johannesburg 2000 Switchboard +27 11 800 8111 Customer call centre 08600 ESKOM or 08600 37566 Debt sponsor Nedbank Corporate and Investment Banking, a division of Nedbank Limited JSE alpha code BIESKM For more information Investor relations Lerato Mashinini InvestorRelations@eskom.co.za Media enquiries Daphne Mokwena MediaDesk@eskom.co.za Group Chief Financial Officer Calib Cassim OfficeoftheCFO@eskom.co.za Queries or feedback on our reports IRfeedback@eskom.co.za Our suite of reports covering our integrated results for 2026 is available at https://www.eskom.co.za/investors/integrated-results/ 130 131 Notes 132 www.eskom.co.za