Sharenet Sites 
Sharenet Sites
Interim Financials
ESKOM HOLDINGS SOC Ltd
30 November 2015
Reviewed condensed group
interim financial statements
for the six months ended 30 September 2015
Contents
Currency of financial statements 1
Approval of the condensed group interim financial statements 2
Independent auditors’ review report on the condensed group interim financial statements to the Minister of Public Enterprises 3
Condensed group statement of financial position 4
Condensed group income statement 5
Condensed group statement of comprehensive income 5
Condensed group statement of changes in equity 6
Condensed group statement of cash flows 7
Selected notes to the condensed group interim financial statements
Note
1 General information 8
2 Basis of preparation 8
3 Significant accounting policies 8
4 Critical accounting estimates and judgements 9
5 Segment information 10
6 Issuances, repurchases and repayments of debt securities and borrowings and share capital 12
7 Dividend paid 12
8 Significant events and transactions 12
9 Seasonality of interim results 12
10 Revenue 13
11 Primary energy 13
12 Employee benefit expense 13
13 Finance cost 13
14 Income tax 13
15 Fair value classification and measurement 13
16 Material events subsequent to 30 September 2015 21
17 Restatement of comparatives 22
18 Pro-forma revaluation of property, plant and equipment (not reviewed) 24
The reviewed condensed group interim financial statements for the six months ended 30 September 2015 have been prepared under the
supervision of the chief financial officer, A Singh CA(SA). These condensed group interim financial statements have been independently reviewed
by the group’s external auditors and were published on 24 November 2015.
Currency of financial statements
The reviewed condensed group interim financial statements are expressed in South African rand (R).
The following are approximate values of the rand to one unit of the selected currencies:
Average Reporting date mid-spot rate
30 September 31 March 30 September 30 September 31 March 30 September
2015 2015 2014 2015 2015 2014
EUR 13.93 13.98 14.35 15.52 13.07 14.28
USD 12.55 11.07 10.65 13.87 12.18 11.32
GBP 19.36 17.81 17.86 21.05 18.01 18.36
CHF 13.17 11.91 11.81 14.23 12.51 11.84
JPY 0.10 0.10 0.10 0.12 0.10 0.10
Currency Abbreviation
Euro EUR
United States dollar USD
Pound sterling (United Kingdom) GBP
Swiss franc CHF
Japanese yen JPY
Reviewed condensed group interim financial statements | 30 September 2015 1
Approval of the condensed group interim financial statements
Basis of preparation
The condensed group interim financial statements from page 4 to page 23 for the six months ended 30 September 2015 have been prepared
in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS), the presentation
and disclosure requirements of International Accounting Standards (IAS) 34 Interim Financial Reporting, and in the manner required by the
Companies Act.
Going concern assumption
The board of directors (board) has made an assessment of the ability of Eskom Holdings SOC Ltd (Eskom) and the group to continue as a going
concern in the foreseeable future.
The board reviewed the group’s performance for the period ended 30 September 2015 and the cash flow forecast for the Multi-Year Price
Determination (MYPD) 3 period ending 31 March 2018.
Eskom submitted the Regulatory Clearing Account (RCA) adjustment application for year 1 of MYPD 3 (2014 financial year) and is preparing for
the application for year 2 of MYPD 3 (2015 financial year).
The board continues to critically examine the group’s activities and costs in order to balance its cash flow requirements. There is a focus through
the Business Productivity Programme (BPP) to identify cost saving and efficiency opportunities together with a pursuit of alternative funding
options.
The board resolved that Eskom’s financial sustainability, liquidity and status as a going concern will not be compromised in support of operational
sustainability and balancing supply and demand and has not approved any generating capital expenditure beyond the Kusile project.
In assessing the ability to raise funds, the current economic climate as well as Eskom’s and the sovereign’s credit ratings have been taken into
account.
Based on the above, the board is satisfied that Eskom and the group have access to adequate resources and facilities to be able to continue
operations for the foreseeable future. Accordingly the board has continued to adopt the going-concern basis in preparing the interim financial
statements.
In the opinion of the board, based on the information available to date, the condensed group interim financial statements fairly present the
financial position of the group at 30 September 2015 and the results of the operations and cash flow information for the six months then ended.
The condensed group interim financial statements have been approved by the board and signed on its behalf by:
B Ngubane B Molefe A Singh
Chairman Group chief executive Chief financial officer
18 November 2015 18 November 2015 18 November 2015
2 Eskom Holdings SOC Ltd
Independent auditors’ review report on the condensed group interim
financial statements to the Minister of Public Enterprises
Introduction
We have reviewed the accompanying condensed group interim financial statements of Eskom Holdings SOC Ltd set out on pages 4 to 23, which
comprise the condensed group statement of financial position as at 30 September 2015, the condensed group income statement, statements of
comprehensive income, changes in equity and cash flows for the six months then ended and selected explanatory notes.
The board’s responsibility for the financial statements
The board is responsible for the preparation and presentation of these condensed group interim financial statements in accordance with the
recognition and measurement requirements of IFRS, the presentation and disclosure requirements of IAS 34 Interim Financial Reporting, the
requirements of the Companies Act and for such internal control as the directors determine is necessary to enable the preparation of interim
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility for the financial statements
Our responsibility is to express a conclusion on these condensed group interim financial statements based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. A review of the condensed group interim financial statements consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain
assurance that we would become aware of all significant matters which might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed group interim financial
statements of Eskom for the six months ended 30 September 2015, are not prepared, in all material respects, in accordance with the recognition
and measurement requirements of IFRS, the presentation and disclosure requirements of IAS 34 Interim Financial Reporting and the requirements
of the Companies Act.
SizweNtsalubaGobodo Inc
Per A Mthimunye
Chartered Accountant (SA)
Registered auditor
Director
18 November 2015
20A Morris Street East
Woodmead
2191
Reviewed condensed group interim financial statements | 30 September 2015 3
Condensed group statement of financial position
at 30 September 2015
Reviewed Audited Reviewed
30 September 31 March 30 September
2015 2015 2014
Rm Rm Rm
Assets
Non-current assets 542 301 505 198 469 172
Property, plant and equipment and intangible assets 486 730 458 881 432 375
Future fuel supplies 8 940 9 079 9 459
Investment in securities 2 527 2 481 2 499
Payments made in advance 3 266 3 004 2 504
Derivatives held for risk management 31 048 19 242 12 753
Trade, finance lease, loan and other receivables 9 285 11 933 9 157
Other assets 505 578 425
Current assets 75 820 57 686 65 150
Inventories 17 329 16 033 15 252
Taxation 152 94 68
Investment in securities and financial trading assets 14 246 12 337 13 981
Payments made in advance 3 342 2 505 3 278
Derivatives held for risk management 4 705 709 910
Trade, finance lease, loan and other receivables 23 200 17 145 18 708
Cash and cash equivalents 12 846 8 863 12 953
Non-current assets held-for-sale – – 12
Total assets 618 121 562 884 534 334
Equity
Capital and reserves 175 717 122 247 128 412
Liabilities
Non-current liabilities 372 651 366 002 322 235
Debt securities and borrowings 281 616 277 458 236 973
Embedded derivatives 5 590 6 647 6 508
Derivatives held for risk management 840 520 277
Deferred tax 24 164 20 131 22 529
Deferred income and payments received in advance 16 727 16 719 16 907
Employee benefit obligations 12 277 11 960 11 765
Provisions 30 194 31 078 25 617
Trade, finance lease and other payables 1 243 1 489 1 659
Current liabilities 69 753 74 635 83 687
Debt securities and borrowings 15 833 19 976 27 942
Embedded derivatives 1 499 1 375 1 203
Derivatives held for risk management 515 2 845 1 730
Deferred income and payments received in advance 4 942 3 020 3 661
Employee benefit obligations 4 126 3 926 3 918
Provisions 10 356 9 972 12 000
Trade, finance lease and other payables 30 820 27 998 25 770
Financial trading liabilities 1 662 5 499 7 463
Taxation – 24 –
Total liabilities 442 404 440 637 405 922
Total equity and liabilities 618 121 562 884 534 334
4 Eskom Holdings SOC Ltd
Condensed group income statement
for the six months ended 30 September 2015
Reviewed Reviewed1 Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2015 2014 2015
Note Rm Rm Rm
Continuing operations
Revenue 10 87 876 81 318 147 691
Other income 1 369 642 4 444
Primary energy 11 (40 999) (38 065) (83 425)
Employee benefit expense 12 (13 806) (13 176) (25 912)
Depreciation and amortisation expense (7 609) (6 672) (14 115)
Net impairment loss (122) (855) (3 766)
Other expenses (8 723) (7 841) (15 771)
Profit before net fair value (loss)/gain and net finance cost 17 986 15 351 9 146
Net fair value (loss)/gain on financial instruments (668) 761 1 940
Profit before net finance cost 17 318 16 112 11 086
Net finance cost (3 498) (3 149) (6 109)
Finance income 1 542 1 547 2 996
Finance cost (5 040) (4 696) (9 105)
Share of profit of equity-accounted investees, net of tax 28 33 49
Profit before tax 13 848 12 996 5 026
Income tax 14 (2 539) (3 675) (1 366)
Profit for the period from continuing operations 11 309 9 321 3 660
Discontinued operations
Loss for the period from discontinued operations – (34) (42)
Profit for the period 11 309 9 287 3 618
Attributable to:
Owner of the company 11 309 9 287 3 618
Condensed group statement of comprehensive income
for the six months ended 30 September 2015
Reviewed Reviewed Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2015 2014 2015
Rm Rm Rm
Profit for the period 11 309 9 287 3 618
Other comprehensive income/(loss) 4 332 (659) (1 155)
Items that may be reclassified subsequently to profit or loss 4 076 (195) (501)
Available-for-sale financial assets (15) (92) (63)
Cash flow hedges 5 683 (202) (665)
Foreign currency translation differences on foreign operations (5) 17 24
Income tax thereon (1 587) 82 203
Items that may not be reclassified subsequently to profit or loss 256 (464) (654)
Remeasurement of post-employment medical benefits 351 (645) (909)
Income tax thereon (95) 181 255
Total comprehensive income for the period 15 641 8 628 2 463
Attributable to:
Owner of the company 15 641 8 628 2 463
1. Restated. Refer to note 17.
Reviewed condensed group interim financial statements | 30 September 2015 5
Condensed group statement of changes in equity
for the six months ended 30 September 2015
Share Equity Cash flow Available- Unrealised Foreign Accumulated Total
capital reserve hedge for-sale fair value currency profit
reserve reserve reserve translation
reserve
Note Rm Rm Rm Rm Rm Rm Rm Rm
Balance at 31 March 2014 – 30 520 6 178 50 (7 744) (6) 90 786 119 784
Profit for the period – – – – – – 9 287 9 287
Other comprehensive (loss)/
income, net of tax – – (145) (67) – 17 (464) (659)
Transfer between reserves – – – – 85 – (85) –
Balance at 30 September 2014 – 30 520 6 033 (17) (7 659) 11 99 524 128 412
Loss for the period – – – – – – (5 669) (5 669)
Other comprehensive (loss)/
income, net of tax – – (334) 21 – 7 (190) (496)
Transfer between reserves – – – – 3 888 – (3 888) –
Balance at 31 March 2015 – 30 520 5 699 4 (3 771) 18 89 777 122 247
Profit for the period – – – – – – 11 309 11 309
Other comprehensive income/
(loss), net of tax – – 4 092 (11) – (5) 256 4 332
Share capital issued 6 10 000 – – – – – – 10 000
Subordinated loan from
shareholder converted
to share capital 6 60 000 (30 520) – – – – (1 651) 27 829
Transfer between reserves – – – – (1 299) – 1 299 –
Balance at 30 September 2015 70 000 – 9 791 (7) (5 070) 13 100 990 175 717
6 Eskom Holdings SOC Ltd
Condensed group statement of cash flows
for the six months ended 30 September 2015
Reviewed Reviewed1 Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2015 2014 2015
Rm Rm Rm
Cash flows from operating activities
Profit before tax 13 848 12 996 5 026
Adjustment for non-cash items 11 544 13 733 31 370
Changes in working capital (3 488) (6 692) (8 868)
Cash generated from operations 21 904 20 037 27 528
Net cash flows from/(used in) derivatives held for risk management 845 160 (751)
Interest received 457 276 697
Interest paid (4) (4) (10)
Income taxes paid (162) (101) (153)
Net cash from operating activities 23 040 20 368 27 311
Cash flows used in investing activities
Proceeds from disposal of property, plant and equipment and intangible assets 320 50 158
Acquisitions of property, plant and equipment and intangible assets (24 149) (24 193) (52 424)
Expenditure on future fuel supplies (270) (1 256) (1 999)
Net cash flows used in investment in securities and financial trading assets (2 041) (1 118) (966)
Increase in payments made in advance (101) (579) (966)
Expenditure incurred on provisions (637) (447) (1 670)
Net cash flows (used in)/from derivatives held for risk management (158) 493 253
Interest received 455 466 1 068
Other cash flows from investing activities 63 86 160
Net cash used in investing activities (26 518) (26 498) (56 386)
Cash flows from financing activities
Debt securities and borrowings raised 16 519 13 369 49 500
Payments made in advance to secure balances raised (155) (88) (187)
Debt securities and borrowings repaid (5 594) (8 081) (14 429)
Share capital issued 10 000 – –
Net cash flows from/(used in) derivatives held for risk management 377 54 (1 982)
Decrease in finance lease payables (54) (6) (111)
(Increase)/decrease in investment in securities
and financial trading assets and liabilities (3 710) 1 497 778
Interest received 550 852 1 449
Interest paid (10 503) (8 222) (17 064)
Net cash from/(used in) financing activities 7 430 (625) 17 954
Net increase/(decrease) in cash and cash equivalents 3 952 (6 755) (11 121)
Cash and cash equivalents at beginning of the period 8 863 19 676 19 676
Foreign currency translation (5) 17 24
Effect of movements in exchange rates on cash held 36 15 284
Cash and cash equivalents at end of the period 12 846 12 953 8 863
1. Restated. Refer to note 17.
Reviewed condensed group interim financial statements | 30 September 2015 7
Selected notes to the condensed group interim financial statements
for the six months ended 30 September 2015
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. Eskom is a vertically integrated operation that generates, transmits and distributes electricity to industrial,
mining, commercial, agricultural, redistributor (municipalities), and residential customers and to international customers in
southern Africa.
2. Basis of preparation
The reviewed condensed group interim financial statements of Eskom as at and for the six months ended 30 September 2015 comprise
the company, its subsidiaries, joint ventures, associates and structured entities (together, the group). The reviewed condensed group
interim financial statements do not include all of the information required for full financial statements and should be read in conjunction
with the Eskom Holdings SOC Ltd 31 March 2015 group annual financial statements. The annual financial statements of the group as
at and for the year ended 31 March 2015 are available for inspection at the company’s registered office and on the Eskom website at
www.eskom.co.za.
The condensed group interim financial statements are prepared in accordance with the recognition and measurement requirements
of International Financial Reporting Standards (IFRS), the presentation and disclosure requirements of IAS 34 Interim Financial Reporting,
and in the manner required by the Companies Act.
The condensed group interim financial statements are prepared on the historical-cost basis except for the following items which are
measured at fair value:
• investment in securities
• derivatives held for risk management
• financial trading assets
• financial trading liabilities
• embedded derivatives
• non-current assets and liabilities held-for-sale
The board’s assessment of the ability of Eskom and the group to continue as a going concern in the foreseeable future included:
• a review of the group’s performance for the six months ended 30 September 2015
• a review of the cash flow forecasts for the MYPD 3 period ending 31 March 2018. These forecasts take into account Eskom’s
regulatory options available, its ability to raise funds, the current and anticipated future economic climate and the credit rating of
Eskom and the sovereign.
The board continues to critically examine the group’s activities and costs in order to balance its cash flow requirements. There is a
focus through the BPP to identify cost saving and efficiency opportunities together with a pursuit of alternative funding options.
The board has resolved that Eskom’s financial sustainability, liquidity and status as a going concern will not be compromised in support
of operational sustainability and balancing supply and demand and has not approved any generating capital expenditure beyond the
Kusile project.
Based on the above, the directors are satisfied that Eskom and the group have access to adequate resources and facilities to be able
to continue operations for the foreseeable future. Accordingly the board has continued to adopt the going-concern basis in preparing
the interim financial statements.
3. Significant accounting policies
The accounting policies applied by the group in these condensed group interim financial statements are consistent with those applied
in the audited financial statements as at and for the year ended 31 March 2015 except for the new or revised statements and
interpretations adopted during the six months ended 30 September 2015. The impact of these changes has been assessed to be
immaterial for the group. The nature of these changes is as follows:
Annual improvements 2012 (effective 1 July 2014)
The improvements amend standards from the 2010–2012 reporting cycle. The changes affect IFRS 2 Share based payments,
IFRS 3 Business combinations, IFRS 8 Operating segments, IFRS 13 Fair value measurement, IAS 16 Property, plant and equipment and IAS 24
Related party disclosures.
Annual improvements 2013 (effective 1 July 2014)
The improvements amend standards from the 2011–2013 reporting cycle. The changes affect IFRS 1 First time adoptions of IFRSs, IFRS 3
Business combinations, IFRS 13 Fair value measurement and IAS 40 Investment property.
Amendment to IAS 19 Employee benefits regarding employee or third party contributions to defined benefit plans
(effective 1 July 2014)
The amendment applies to contributions from employees or third parties to defined benefit plans and clarifies the treatment of such
contributions. The objective of the amendment is to simplify the accounting for contributions that are independent of the number of
years of employee service.
8 Eskom Holdings SOC Ltd
4. Critical accounting estimates and judgements
Estimates and judgements are evaluated continually and are based on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the circumstances. The group makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by definition, seldom equal the related actual results.
The significant estimates and judgements made by management in applying the accounting policies and the key sources of estimation
uncertainty were substantially the same as those applied to the financial statements as at and for the year ended 31 March 2015
except for embedded derivatives and coal-related obligations as detailed below.
Embedded derivatives
The forward electricity price used to value the embedded derivatives at 30 September 2015 is based on the NERSA MYPD 3 tariff
increase of 8% for the period 2016/17 and 2017/18, whereafter a forecast return on the regulatory asset base is used until maturity.
Another key estimate in the valuation of embedded derivatives includes the forecast United States (US) production price index (PPI)
which is based on an internal model which simulates US PPI using other observable market prices such as the South African consumer
price index and ZAR/USD forward exchange rates.
The contracted electricity price used to value embedded derivatives is based on a combination of the factors in the table below over
the contracted period.
Forecast sales volumes are based on the most likely future sales volumes based on past trends and taking into account future
production plans in consultation with industry specific experts and key customer executives.
The fair value of embedded derivatives takes into account the inherent uncertainty relating to the future cash flows of embedded
derivatives, such as liquidity, model risk and other economic factors.
The following valuation assumptions for the future electricity price curve discussed above for the valuation of embedded derivatives
were used and are regarded as the best estimates by management:
Period ended 30 September 2015 (reviewed)
Input Unit 2015 2016 2017 2018 2019 2020
Aluminium USD per ton 1 551 1 588 1 655 1 725 1 796 1 864
Volatility Year-on-year (ratio) 0.19 0.19 0.19 0.19 0.19 0.19
Rand interest rate Continuous actual/365 days (%) 6.06 7.26 7.06 7.38 7.62 7.83
Dollar interest rate Annual actual/365 days (%) 0.24 0.97 0.75 0.99 1.21 1.40
United States PPI Year-on-year (%) (5.30) 2.18 2.01 1.51 2.23 2.36
Rand/USD USD per rand 13.87 14.31 15.25 16.26 17.35 19.76
Period ended 31 March 2015 (audited)
Input Unit 2015 2016 2017 2018 2019 2020
Aluminium USD per ton 1 792 1 826 1 883 1 940 1 985 2 035
Volatility Year-on-year (ratio) 0.19 0.19 0.19 0.19 0.19 0.19
Rand interest rate Continuous actual/365 days (%) 5.61 7.16 6.70 6.93 7.09 7.24
Dollar interest rate Annual actual/365 days (%) 0.09 0.92 0.81 1.13 1.38 1.57
United States PPI Year-on-year (%) (4.98) 2.11 1.87 2.01 1.90 2.33
Rand/USD USD per rand 12.50 12.50 14.29 14.29 14.29 16.67
Period ended 30 September 2014 (reviewed)
Input Unit 2014 2015 2016 2017 2018 2019
Aluminium USD per ton 1 930 2 003 2 042 2 086 2 134 2 189
Volatility Year-on-year (ratio) 0.19 0.19 0.19 0.19 0.19 0.19
Rand interest rate Continuous actual/365 days (%) 5.79 7.12 6.91 7.20 7.46 7.68
Dollar interest rate Annual actual/365 days (%) 0.17 0.73 0.82 1.31 1.69 1.96
United States PPI Year-on-year (%) 2.60 2.31 2.23 2.01 2.61 1.89
Rand/USD USD per rand 11.11 12.50 12.50 14.29 14.29 14.29
Coal-related obligations
The discount rate used for these provisions was 7.6% (31 March 2015: 4.7%; 30 September 2014: 5.0%) for the group and company.
The estimated payment dates of the costs are between 2015 and 2020. The carrying amount of coal related obligation liabilities for
the group and company is R6 059 million (31 March 2015: R7 954 million; 30 September 2014: R3 232 million).
Reviewed condensed group interim financial statements | 30 September 2015 9
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
5. Segment information
Management has determined the reportable segments based on the reports regularly provided, reviewed and used by the executive
management committee (Exco) to make strategic decisions and assess performance of the segments. Exco assesses the performance
of the operating segments based on a measure of profit or loss consistent with that of the financial statements. The amounts provided
to Exco with respect to total assets and liabilities are measured in terms of IFRS. These assets and liabilities are allocated based on
the operation of the segment and the physical location of the assets.
The segment information provided to Exco for the reportable segments is as follows:
Generation Transmission Distribution Group Group All other Corporate Reallocation Group
customer capital segments and other and inter-
services segment
transactions
Rm Rm Rm Rm Rm Rm Rm Rm Rm
30 September 2015
(reviewed)
External revenue – 3 284 484 84 108 – 568 – (568) 87 876
Inter-segment
revenue/recoveries 58 828 10 308 12 867 (81 847) – 6 008 – (6 164) –
Total revenue 58 828 13 592 13 351 2 261 – 6 576 – (6 732) 87 876
Profit/(loss)
before tax 7 499 1 883 3 700 1 813 (2 502) 753 245 457 13 848
Income tax – – – – – (205) (2 206) (128) (2 539)
Profit/(loss)
for the period 7 499 1 883 3 700 1 813 (2 502) 548 (1 961) 329 11 309
Segment assets 177 836 45 758 70 535 17 244 227 822 29 432 75 436 (25 942) 618 121
Segment liabilities 43 595 4 389 26 374 16 504 18 819 22 501 336 359 (26 137) 442 404
30 September 2014
(reviewed)
Continuing
operations
External revenue – 2 743 424 78 134 – 597 – (580) 81 318
Inter-segment
revenue/recoveries 55 372 6 914 12 684 (74 953) – 4 721 – (4 738) –
Total revenue 55 372 9 657 13 108 3 181 – 5 318 – (5 318) 81 318
Profit/(loss)
before tax 4 415 1 803 3 939 2 507 (1 082) 771 96 547 12 996
Income tax – – – – – (192) (3 311) (172) (3 675)
Profit/(loss) for
the period from
continuing
operations 4 415 1 803 3 939 2 507 (1 082) 579 (3 215) 375 9 321
Discontinued
operations
Loss for the period
from discontinued
operations – – – – – (34) – – (34)
Profit/(loss)
for the period 4 415 1 803 3 939 2 507 (1 082) 545 (3 215) 375 9 287
Segment assets 118 853 37 018 67 678 16 655 234 313 26 345 55 781 (22 309) 534 334
Segment liabilities 37 713 2 983 23 815 16 743 20 131 20 273 306 569 (22 305) 405 922
10 Eskom Holdings SOC Ltd
Generation Transmission Distribution Group Group All other Corporate Reallocation Group
customer capital segments and other and inter-
services segment
transactions
Rm Rm Rm Rm Rm Rm Rm Rm Rm
31 March 2015
(audited)
Continuing
operations
External revenue – 6 451 1 210 140 030 – 1 112 – (1 112) 147 691
Inter-segment
revenue/recoveries 101 954 12 522 19 097 (133 573) – 9 613 – (9 613) –
Total revenue 101 954 18 973 20 307 6 457 – 10 725 – (10 725) 147 691
(Loss)/profit
before tax (1 057) 332 1 655 2 070 703 1 505 306 (488) 5 026
Income tax – – – – – (63) (1 169) (134) (1 366)
(Loss)/profit for
the period from
continuing
operations (1 057) 332 1 655 2 070 703 1 442 (863) (622) 3 660
Discontinued
operations
Loss for the period
from discontinued
operations – – – – – (42) – – (42)
(Loss)/profit
for the period (1 057) 332 1 655 2 070 703 1 400 (863) (622) 3 618
Segment assets 131 558 40 677 69 632 14 488 249 059 25 463 54 145 (22 138) 562 884
Segment liabilities 44 480 4 090 24 868 16 372 16 121 19 092 337 587 (21 973) 440 637
Inter-segment purchases and sales of electricity are allocated between the Generation, Transmission, Distribution and Group customer
services segments based on cost recovery plus a uniform return on assets.
Reviewed condensed group interim financial statements | 30 September 2015 11
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
6. Issuances, repurchases and repayments of debt securities and borrowings and share capital
6.1 Debt securities and borrowings
The nature of the group’s issuances, repurchases and repayments of debt securities and borrowings are consistent with those reported
previously, except for the conversion of the subordinated loan from the shareholder to equity that resulted in the derecognition of
the liability portion of the compound instrument. The debt raised and repaid by the group is disclosed in the statement of cash flows.
6.2 Share capital
Eskom converted its existing authorised share capital to no par value shares and increased the number of authorised shares from
1 000 to 100 billion ordinary shares.
During the period the shareholder approved the conversion of the subordinated loan from the shareholder to share capital.
The conversion resulted in the derecognition of the equity portion of the compound instrument and the issue of 60 billion shares to
the shareholder.
Eskom also received R10 billion of the government equity injection of R23 billion during the period for which 10 billion shares were
issued to government. A reconciliation of the number of shores in issue is as follows:
Reviewed Reviewed Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2015 2014 2015
Shares Shares Shares
Balance at beginning of the period 1 1 1
Share capital issued 10 000 000 000 – –
Conversion of subordinated loan from the shareholder to share capital 60 000 000 000 – –
Balance at end of the period 70 000 000 001 1 1
7. Dividend paid
No dividend was paid to the shareholder during the six months ended 30 September 2015 nor in the comparative periods presented.
8. Significant events and transactions
8.1 Property, plant and equipment
Property, plant and equipment increased by R28 billion (after depreciation) during the six months ended 30 September 2015. The
increase relates mainly to the costs incurred on the capital expansion programme.
8.2 Derivatives held for risk management
Derivatives held for risk management increased by R18 billion during the six months ended 30 September 2015. This increase is largely
due to the deterioration of the rand against the euro and United States dollar and new cross currency swaps taken out to hedge
foreign debt securities and borrowings.
8.3 Changes in board and executive committee
The acting appointments of the chairman (B Ngubane), group chief executive (B Molefe) and chief financial officer (A Singh) were
made permanent effective from 25 September 2015.
9. Seasonality of interim results
The sale of electricity is subject to seasonal fluctuations where revenue is normally higher during the first six months of the financial
year (winter months) as compared to the summer months, both in terms of tariff energy charges and peak demand.
12 Eskom Holdings SOC Ltd
Reviewed Reviewed Audited
six months six months year
ended ended ended
30 September 30 September 31 March
2015 2014 2015
Rm Rm Rm
10. Revenue
Electricity revenue 87 484 80 785 146 268
Other revenue 392 533 1 423
87 876 81 318 147 691
Electricity revenue not recognised 868 – 597
The electricity revenue was not recognised as it was assessed that there
is a high probability that the related economic benefits will not materialise.
Despite this, Eskom continues to actively pursue recovery of these amounts.
11. Primary energy
Own generation costs 28 151 28 415 61 630
Environmental levy 4 091 4 276 8 353
International electricity purchases 2 149 1 661 3 679
Independent power producers 6 501 3 534 9 453
Other 107 179 310
40 999 38 065 83 425
12. Employee benefit expense
Gross employee benefit expense 15 387 16 330 32 316
Capitalised to property, plant and equipment (1 581) (3 154) (6 404)
13 806 13 176 25 912
13. Finance cost
Gross finance cost 15 394 12 980 26 494
Capitalised to property, plant and equipment (10 354) (8 284) (17 389)
5 040 4 696 9 105
14. Income tax
Income tax for the interim period is recognised based on management’s best estimate of the weighted average annual income tax
rate expected for the full financial year which is applied to the pre-tax income of the interim period.
The 9.7% difference between the effective and standard tax rate is mainly due to the reversal of the deferred tax associated with the
derecognition of the subordinated loan from the shareholder.
15. Fair value classification and measurement
15.1 Accounting classification and fair value
Valuation processes
The group has a controlled framework with respect to the measurement of fair values. The framework includes a valuation team that
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. If third party information, such as
broker quotes or pricing services, is used to measure fair value, then the valuation team assesses and documents the evidence obtained
from the third parties to support their conclusion that such valuations meet the requirements of IFRS, including the level in the fair
value hierarchy that the resulting fair value estimate should be classified to.
Principal markets
The group is involved in various principal markets because of the unique funding activities undertaken. The fair value is determined
by each participant in the different principal markets. The principal markets are:
• capital and money markets
• development financing institutions
• export credit agencies
Reviewed condensed group interim financial statements | 30 September 2015 13
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
15. Fair value classification and measurement (continued)
15.1 Accounting classification and fair value (continued)
Principal markets (continued)
The classification of each class of financial assets and liabilities, and their fair values are:
Held-for- Loans and Available- Liabilities at Other Total Fair
trading receivables for-sale amortised assets and carrying value
cost liabilities amount
Rm Rm Rm Rm Rm Rm Rm
30 September 2015 (reviewed)
Financial assets
Investment in securities – – 11 258 – – 11 258 11 258
Government bonds – – 3 852 – – 3 852 3 852
Negotiable certificates of deposit – – 7 406 – – 7 406 7 406
Loans receivable1 – 8 911 – – – 8 911 7 395
Secured by mortgages – 8 716 – – – 8 716 7 266
Other – 195 – – – 195 129
Derivatives held for risk management 4 648 – – – 31 105 35 753 35 753
Foreign exchange derivatives 4 629 – – – 31 105 35 734 35 734
Commodity derivatives 10 – – – – 10 10
Credit default swap 9 – – – – 9 9
Finance lease receivables2 – – – – 500 500 500
Trade and other receivables2 – 23 059 – – – 23 059 23 059
Financial trading assets 5 515 – – – – 5 515 5 515
Repurchase agreements 3 881 – – – – 3 881 3 881
Listed shares 1 132 – – – – 1 132 1 132
Government bonds 502 – – – – 502 502
Cash and cash equivalents – 12 846 – – – 12 846 12 846
Bank balances – 8 628 – – – 8 628 8 628
Unsettled deals – (857) – – – (857) (857)
Fixed deposits – 3 804 – – – 3 804 3 804
Gilt carries – 1 271 – – – 1 271 1 271
10 163 44 816 11 258 – 31 605 97 842 96 326
Financial liabilities
Debt securities and borrowings – – – 297 449 – 297 449 282 910
Eskom bonds – – – 118 296 – 118 296 115 910
Promissory notes – – – 43 – 43 46
Commercial paper – – – 7 369 – 7 369 8 971
Eurorand zero coupon bonds – – – 4 194 – 4 194 3 322
Foreign bonds – – – 55 454 – 55 454 52 909
Development financing institutions – – – 68 205 – 68 205 52 671
Export credit facilities – – – 36 314 – 36 314 33 828
Other loans – – – 7 574 – 7 574 15 253
Embedded derivatives – – – – 7 089 7 089 7 089
Derivatives held for risk management 960 – – – 395 1 355 1 355
Foreign exchange derivatives 118 – – – 395 513 513
Commodity derivatives 2 – – – – 2 2
Credit default swap 840 – – – – 840 840
Finance lease payables2 – – – – 482 482 482
Trade and other payables2 – – – 30 159 – 30 159 30 159
Financial trading liabilities 1 662 – – – – 1 662 1 662
Short-sold government bonds 264 – – – – 264 264
Repurchase agreements 1 398 – – – – 1 398 1 398
2 622 – – 327 608 7 966 338 196 323 657
14 Eskom Holdings SOC Ltd
Held-for- Loans and Available- Liabilities at Other Total Fair
trading receivables for-sale amortised assets and carrying value
cost liabilities amount
Rm Rm Rm Rm Rm Rm Rm
31 March 2015 (audited)
Financial assets
Investment in securities – – 8 496 – – 8 496 8 496
Government bonds – – 4 802 – – 4 802 4 802
Negotiable certificates of deposit – – 3 694 – – 3 694 3 694
Loans receivable1 – 8 915 – – – 8 915 7 474
Secured by mortgages – 8 659 – – – 8 659 7 315
Other – 256 – – – 256 159
Derivatives held for risk management 1 541 – – – 18 410 19 951 19 951
Foreign exchange derivatives 1 524 – – – 18 410 19 934 19 934
Commodity derivatives 8 – – – – 8 8
Credit default swap 9 – – – – 9 9
Finance lease receivables2 – – – – 520 520 520
Trade and other receivables2 – 19 598 – – – 19 598 19 598
Financial trading assets 6 322 – – – – 6 322 6 322
Repurchase agreements 5 084 – – – – 5 084 5 084
Listed shares 1 179 – – – – 1 179 1 179
Government bonds 59 – – – – 59 59
Cash and cash equivalents – 8 863 – – – 8 863 8 863
Bank balances – 5 959 – – – 5 959 5 959
Unsettled deals – (1 101) – – – (1 101) (1 101)
Fixed deposits – 4 005 – – – 4 005 4 005
7 863 37 376 8 496 – 18 930 72 665 71 224
Financial liabilities
Debt securities and borrowings – – – 297 434 – 297 434 269 195
Eskom bonds – – – 112 103 – 112 103 114 838
Promissory notes – – – 40 – 40 47
Commercial paper – – – 7 531 – 7 531 7 377
Eurorand zero coupon bonds – – – 3 942 – 3 942 3 594
Foreign bonds – – – 48 670 – 48 670 48 585
Development financing institutions – – – 62 447 – 62 447 49 691
Export credit facilities – – – 28 488 – 28 488 27 966
Subordinated loan from shareholder – – – 26 621 – 26 621 12 420
Other loans – – – 7 592 – 7 592 4 677
Embedded derivatives – – – – 8 022 8 022 8 022
Derivatives held for risk management 1 330 – – – 2 035 3 365 3 365
Foreign exchange derivatives 830 – – – 2 035 2 865 2 865
Commodity derivatives 1 – – – – 1 1
Credit default swap 499 – – – – 499 499
Finance lease payables2 – – – – 488 488 488
Trade and other payables2 – – – 28 419 – 28 419 28 419
Financial trading liabilities 5 499 – – – – 5 499 5 499
Short-sold government bonds 493 – – – – 493 493
Repurchase agreements 5 006 – – – – 5 006 5 006
6 829 – – 325 853 10 545 343 227 314 988
1. The fair value of loans receivable is based on what a market participant would be willing to pay to acquire the loans. This participant would not have the ability to garnish salaries, thus
increasing the probability of default resulting in a lower fair value than the group’s carrying value.
2. The fair values of these financial instruments approximate their carrying amounts. The effect of discounting is not expected to be material.
Reviewed condensed group interim financial statements | 30 September 2015 15
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
15. Fair value classification and measurement (continued)
15.1 Accounting classification and fair value (continued)
Principal markets (continued)
Held-for- Loans and Available- Liabilities at Other Total Fair
trading receivables for-sale amortised assets and carrying value
cost liabilities amount
Rm Rm Rm Rm Rm Rm Rm
30 September 2014 (reviewed)
Financial assets
Investment in securities – – 9 656 – – 9 656 9 656
Government bonds – – 5 735 – – 5 735 5 735
Negotiable certificates of deposit – – 3 921 – – 3 921 3 921
Loans receivable1 – 8 929 – – – 8 929 7 172
Secured by mortgages – 8 589 – – – 8 589 6 974
Other – 340 – – – 340 198
Derivatives held for risk management 1 239 – – – 12 424 13 663 13 663
Foreign exchange derivatives 1 232 – – – 12 424 13 656 13 656
Credit default swap 7 – – – – 7 7
Finance lease receivables2 – – – – 529 529 529
Trade and other receivables2 – 18 377 – – – 18 377 18 377
Financial trading assets 6 824 – – – – 6 824 6 824
Repurchase agreements 5 586 – – – – 5 586 5 586
Listed shares 1 087 – – – – 1 087 1 087
Government bonds 151 – – – – 151 151
Cash and cash equivalents – 12 953 – – – 12 953 12 953
Bank balances – 6 890 – – – 6 890 6 890
Unsettled deals – 283 – – – 283 283
Fixed deposits – 5 711 – – – 5 711 5 711
Other – 69 – – – 69 69
8 063 40 259 9 656 – 12 953 70 931 69 174
Financial liabilities
Debt securities and borrowings – – – 264 915 – 264 915 249 862
Eskom bonds – – – 106 477 – 106 477 107 175
Promissory notes – – – 37 – 37 48
Commercial paper – – – 10 055 – 10 055 10 053
Eurorand zero coupon bonds – – – 3 707 – 3 707 3 839
Foreign bonds – – – 31 195 – 31 195 33 105
Development financing institutions – – – 53 527 – 53 527 45 575
Export credit facilities – – – 30 820 – 30 820 32 155
Subordinated loan from shareholder – – – 25 486 – 25 486 14 342
Other loans – – – 3 611 – 3 611 3 570
Embedded derivatives – – – – 7 711 7 711 7 711
Derivatives held for risk management 1 100 – – – 907 2 007 2 007
Foreign exchange derivatives 989 – – – 907 1 896 1 896
Commodity derivatives 61 – – – – 61 61
Credit default swap 50 – – – – 50 50
Finance lease payables2 – – – – 494 494 494
Trade and other payables2 – – – 25 518 – 25 518 25 518
Financial trading liabilities 7 463 – – – – 7 463 7 463
Short-sold government bonds 1 723 – – – – 1 723 1 723
Repurchase agreements 5 740 – – – – 5 740 5 740
8 563 – – 290 433 9 112 308 108 293 055
1. The fair value of loans receivable is based on what a market participant would be willing to pay to acquire the loans. This participant would not have the ability to garnish salaries, thus
increasing the probability of default resulting in a lower fair value than the group’s carrying value.
2. The fair values of these financial instruments approximate their carrying amounts. The effect of discounting is not expected to be material.
16 Eskom Holdings SOC Ltd
15.2 Fair value hierarchy
There has been no change in the valuation technique 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 for the asset or liability, either directly (as prices)
or indirectly (derived from prices).
Level 3: Inputs for the financial asset or financial liability that are not based on observable market data (unobservable inputs).
The group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfer
has occurred.
Eskom’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)
There were no transfers between level 1, 2 or 3 of the fair value hierarchy during the six months ended 30 September 2015 nor in
the comparative periods presented.
The valuation techniques used are as follows:
Level 1: Quoted prices (unadjusted) in active markets
The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. 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. The quoted market price used for financial assets held by the group is the current
bid price and for financial liabilities the current ask price is used. Instruments included in level 1 comprise listed investments classified
as trading securities or available-for-sale.
Level 2: Inputs other than quoted prices included within level 1 that are observable
Level 2 fair values for debt securities and borrowings are determined using a discounted cash flow technique, which uses expected
cash flows and a market-related discount rate. Level 2 fair values for simple over-the-counter derivative financial instruments are based
on broker quotes. These quotes are tested for reasonableness by discounting expected future cash flows using a market interest rate
for a similar instrument at the measurement date.
Fair values reflect the credit risk of the instruments and include adjustments for the credit risk of the group entity and counterparty
where appropriate. The fair values are obtained from listed bond yields or using a discounted cash flow model for unlisted instruments.
The future cash flows are discounted using a zero curve, which is adjusted to reflect the credit value adjustment (CVA) and debit
value adjustment (DVA) that are constructed from money market and swap rates. Eskom applies a non-contingent bilateral CVA/
DVA approach in the valuation of cross-currency swaps.
Level 3: Inputs not based on observable market data (unobservable inputs)
Level 3 items are fair valued using unobservable inputs. For information on the valuation techniques and assumptions of embedded
derivatives refer to page 9.
Reviewed condensed group interim financial statements | 30 September 2015 17
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
15. Fair value classification and measurement (continued)
15.2 Fair value hierarchy (continued)
The table below analyses fair value measurements which are categorised into the different levels in the fair value hierarchy based on
the inputs to the valuation techniques used:
Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
30 September 2015 (reviewed)
Assets measured at fair value
Investment in securities 3 852 7 406 – 11 258
Government bonds 3 852 – – 3 852
Negotiable certificates of deposit – 7 406 – 7 406
Derivatives held for risk management – 35 753 – 35 753
Foreign exchange derivatives – 35 734 – 35 734
Credit default swap – 9 – 9
Financial trading assets 1 634 3 881 – 5 515
Repurchase agreements – 3 881 – 3 881
Listed shares 1 132 – – 1 132
Government bonds 502 – – 502
5 486 47 040 – 52 526
Liabilities measured at fair value
Embedded derivatives – – 7 089 7 089
Derivatives held for risk management – 1 355 – 1 355
Foreign exchange derivatives – 513 – 513
Commodity derivatives – 2 – 2
Credit default swap – 840 – 840
Financial trading liabilities 264 1 398 – 1 662
Short-sold government bonds 264 – – 264
Repurchase agreements – 1 398 – 1 398
264 2 753 7 089 10 106
18 Eskom Holdings SOC Ltd
Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
31 March 2015 (audited)
Assets measured at fair value
Investment in securities 4 802 3 694 – 8 496
Government bonds 4 802 – – 4 802
Negotiable certificates of deposit – 3 694 – 3 694
Derivatives held for risk management – 19 951 – 19 951
Foreign exchange derivatives – 19 934 – 19 934
Commodity derivatives – 8 – 8
Credit default swap – 9 – 9
Financial trading assets 1 238 5 084 – 6 322
Repurchase agreements – 5 084 – 5 084
Listed shares 1 179 – – 1 179
Government bonds 59 – – 59
6 040 28 729 – 34 769
Liabilities measured at fair value
Embedded derivatives – – 8 022 8 022
Derivatives held for risk management – 3 365 – 3 365
Foreign exchange derivatives – 2 865 – 2 865
Commodity derivatives – 1 – 1
Credit default swap – 499 – 499
Financial trading liabilities 493 5 006 – 5 499
Short-sold government bonds 493 – – 493
Repurchase agreements – 5 006 – 5 006
493 8 371 8 022 16 886
Reviewed condensed group interim financial statements | 30 September 2015 19
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
15. Fair value classification and measurement (continued)
15.2 Fair value hierarchy (continued)
Level 1 Level 2 Level 3 Total
Rm Rm Rm Rm
30 September 2014 (reviewed)
Assets measured at fair value
Investment in securities 5 735 3 921 – 9 656
Government bonds 5 735 – – 5 735
Negotiable certificates of deposit – 3 921 – 3 921
Derivatives held for risk management – 13 663 – 13 663
Foreign exchange derivatives – 13 656 – 13 656
Credit default swap – 7 – 7
Financial trading assets 1 238 5 586 – 6 824
Repurchase agreements – 5 586 – 5 586
Listed shares 1 087 – – 1 087
Government bonds 151 – – 151
6 973 23 170 – 30 143
Liabilities measured at fair value
Embedded derivatives – – 7 711 7 711
Derivatives held for risk management – 2 007 – 2 007
Foreign exchange derivatives – 1 896 – 1 896
Commodity derivatives – 61 – 61
Credit default swap – 50 – 50
Financial trading liabilities 1 723 5 740 – 7 463
Short-sold government bonds 1 723 – – 1 723
Repurchase agreements – 5 740 – 5 740
1 723 7 747 7 711 17 181
The movement in the fair value measurements in level 3 of the fair value hierarchy is as follows:
Reviewed Audited Reviewed
six months year six months
ended ended ended
30 September 31 March 30 September
2015 2015 2014
Rm Rm Rm
Embedded derivatives
Balance at beginning of the period 8 022 9 332 9 332
Net fair value gain on embedded derivatives (933) (1 310) (1 621)
Balance at end of the period 7 089 8 022 7 711
The fair value of embedded derivatives is determined by using a forward electricity price curve to value the host contract and the
derivative contract is valued by using market forecasts of future commodity prices, rand/USD exchange rate, interest rate differential,
future sales volumes, production prices and liquidity, model risk and other economic factors.
The forecast cash flow is determined and then discounted at the relevant interest rate curve. The net present value of the cash flows
is then converted to the reporting currency at the spot rand/USD exchange rate. The fair value of the embedded derivative is adjusted,
where applicable, to take into account the inherent uncertainty relating to the future cash flows of embedded derivatives such as
liquidity, model risk and other economic factors. The important assumptions are obtained either with reference to the contractual
provisions of the relevant contracts or from independent market sources where appropriate. These assumptions are:
• spot and forward commodity prices
• spot and forward rand/USD exchange rates
• spot and forward interest rates
• forecast sales volumes
• spot and forward consumer and foreign production prices indices
• liquidity, model risk and other economic factors
20 Eskom Holdings SOC Ltd
Embedded derivatives that are not separated are effectively accounted for as part of the hybrid instrument. Non-option based
derivatives are separated on terms that result in a fair value at the date of inception of zero. 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 over the period of the agreement. The
fair value will depend on the strike price at inception.
The only significant unobservable input is the US PPI.
Sensitivity analysis
The approximate change in the value of embedded derivatives if one of the inputs is changed is disclosed below. The analysis assumes
that all other variables remain constant and the possible impact on profit or loss is:
Reviewed Audited Reviewed
30 September 2015 31 March 2015 30 September 2014
increase decrease increase decrease increase decrease
Unit change Rm Rm Rm Rm Rm Rm
Aluminium price 1% 97 (97) 104 (104) 112 (112)
Rand interest rate 100 basis points 573 (615) 659 (709) 747 (807)
Dollar interest rate 100 basis points (395) 410 (436) 451 (502) 520
Electricity tariffs 1% (400) 392 (568) 553 (708) 684
United States PPI 1% 162 (161) 152 (153) 187 (189)
Rand/USD 1% 120 (116) 127 (123) 134 (139)
15.3 Day-one gain/(loss)
The group recognises a day-one gain/(loss) on initial recognition of cross-currency, credit default and interest rate swaps held as
hedging instruments where applicable.
The movement relating to the day-one gain from these hedging instruments are as follows:
Reviewed Audited Reviewed
six months year six months
ended ended ended
30 September 31 March 30 September
2015 2015 2014
Rm Rm Rm
Balance at beginning of the period 700 168 168
Day-one gain recognised 1 663 560 82
Amortised to profit or loss (76) (28) (8)
Balance at end of the period 2 287 700 242
The remaining balance of the day-one gain/(loss) is included within derivatives held for risk management in the statement of financial
position.
16. Material events subsequent to 30 September 2015
There were no material events after the reporting date.
Reviewed condensed group interim financial statements | 30 September 2015 21
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
17. Restatement of comparatives
At 31 March 2015 the following restatements were made in the financial statements and as a result the September 2014 income
statement and cash flows were restated accordingly.
Reclassification of revenue and other income
The main business activity of the Eskom group is the generation, transmission and distribution of electricity. The business activities
of the subsidiaries while different are to support the electricity business. To improve the relevance of information presented the
revenue earned by subsidiaries has been presented as other income (excluding EFC) and finance income (EFC) to only reflect revenue
from the main business activity as revenue. Other income has been reallocated as it is more appropriate to present it with the
related expenses.
Reclassification of statements of cash flows
An overall review of the nature and classification of cash flows in the statements of cash flows was undertaken to better reflect the
nature of cash flow items. This was considered relevant as a consequence of the group’s changing operational environment and
circumstances, including the material increases in debt financing and capital investment. This resulted in revised classifications for some
cash flow streams which better reflect their nature. Cash flow classification is dependent upon the specific circumstances of the entity
for which they are being presented at a point in time and as such is reviewed where the circumstances of the entity change. The
revised classifications provide the user with a better reflection of the source and destination of cash balances acquired and used within
the business.
The impact of the restatements for the period ended 30 September 2014 is as follows:
Previously Adjustments Restated
reported
Rm Rm Rm
Income statement
Continuing operations
Revenue 81 898 (580) 81 318
Other income 452 190 642
Primary energy (38 065) – (38 065)
Employee benefit expense (13 176) – (13 176)
Depreciation and amortisation expense (6 672) – (6 672)
Net impairment loss (855) – (855)
Other expenses (7 841) – (7 841)
Profit before net fair value gain and net finance cost 15 741 (390) 15 351
Net fair value gain on financial instruments 761 – 761
Profit before net finance cost 16 502 (390) 16 112
Net finance cost (3 539) 390 (3 149)
Finance income 1 157 390 1 547
Finance cost (4 696) – (4 696)
Share of profit of equity-accounted investees after tax 33 – 33
Profit before tax 12 996 – 12 996
Income tax (3 675) – (3 675)
Profit for the period from continuing operations 9 321 – 9 321
Discontinued operations
Loss for the period from discontinued operations (34) – (34)
Profit for the period 9 287 – 9 287
22 Eskom Holdings SOC Ltd
Previously Adjustments Restated
reported
Rm Rm Rm
Cash flow statement
Cash flows from operating activities
Profit before tax 12 996 – 12 996
Adjustment for non-cash items 14 081 (348) 13 733
Changes in working capital (7 729) 1 037 (6 692)
Cash generated from operations 19 348 689 20 037
Net cash flows from financial trading assets 2 273 (2 273) –
Net cash flows used in financial trading liabilities (3 005) 3 005 –
Net cash flows (used in)/from derivatives held for risk management (345) 505 160
Net cash flows used in non-current assets held-for-sale (64) 64 –
Interest received – 276 276
Interest paid – (4) (4)
Income taxes paid (101) – (101)
Net cash from operating activities 18 106 2 262 20 368
Cash flows used in investing activities
Proceeds from disposal of property, plant and equipment and intangible assets 50 – 50
Acquisitions of property, plant and equipment and intangible assets (24 193) – (24 193)
Expenditure on future fuel supplies (1 256) – (1 256)
Net cash flows used in investment in securities and financial trading assets – (1 118) (1 118)
Increase in payments made in advance – (579) (579)
Expenditure incurred on provisions – (447) (447)
Net cash flows from derivatives held for risk management – 493 493
Interest received – 466 466
Other cash flows from investing activities 115 (29) 86
Net cash used in investing activities (25 284) (1 214) (26 498)
Cash flows from financing activities
Debt securities and borrowings raised 13 369 – 13 369
Payments made in advance to secure balances raised – (88) (88)
Debt securities and borrowings repaid (8 445) 364 (8 081)
Net cash flows from/(used in) derivatives held for risk management – 54 54
Decrease in finance lease payables (6) – (6)
Decrease in investment in securities and financial
trading assets and liabilities 1 111 386 1 497
Interest received 1 204 (352) 852
Interest paid (6 795) (1 427) (8 222)
Net cash from/(used in) financing activities 438 (1 063) (625)
Net decrease in cash and cash equivalents (6 740) (15) (6 755)
Cash and cash equivalents at beginning of the period 19 676 – 19 676
Foreign currency translation 17 – 17
Effect of movements in exchange rates on cash held – 15 15
Cash and cash equivalents at end of the period 12 953 – 12 953
Reviewed condensed group interim financial statements | 30 September 2015 23
Selected notes to the condensed group interim financial statements (continued)
for the six months ended 30 September 2015
18. Pro-forma revaluation of property, plant and equipment (not reviewed)
The group currently accounts for its property, plant and equipment using the cost model under IAS 16 Property, plant and equipment.
The cost model requires that property, plant and equipment should be measured at cost (including borrowing cost capitalised in respect
of qualifying assets), less accumulated depreciation and impairment. However, the cost model does not reflect the true economic value
of the group’s property, plant and equipment and the basis on which Eskom’s tariff is calculated by NERSA. Therefore, a summary has
been provided below reflecting what the impact on the condensed group interim financial statements would be if the group’s property,
plant and equipment was measured using the depreciated replacement cost (DRC) model.
Borrowing costs were not included in the carrying amount of property, plant and equipment when determining the increase or decrease
in the revaluation surplus and have therefore been expensed. The fair values determined using the DRC model were reviewed for a
possible impairment loss in order to determine whether or not the net future cash inflows related to the use of property, plant and
equipment are less than the calculated fair value of property, plant and equipment. The fair values disclosed below are net of the
adjustment of R186 billion (March 2015: R206 billion; September 2014: R219 billion) made for the tariff shortfall. This shortfall is expected
to be eliminated once the electricity price determined in terms of the regulatory methodology, which is based on the depreciated
replacement values, is fully phased in by NERSA.
30 September 2015 31 March 2015 30 September 2014
Historical Adjustments After Historical Adjustments After Historical Adjustments After
cost revaluation cost revaluation cost revaluation
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Condensed
group statement
of financial
position
Assets 618 121 239 322 857 443 562 884 221 513 784 397 534 334 209 395 743 729
Property, plant
and equipment 483 747 195 005 678 752 455 977 181 551 637 528 429 488 173 169 602 657
Deferred tax 129 44 317 44 446 230 39 962 40 192 74 36 226 36 300
Other assets 134 245 – 134 245 106 677 – 106 677 104 772 – 104 772
Equity and liabilities 618 121 239 322 857 443 562 884 221 513 784 397 534 334 209 395 743 729
Total equity 175 717 140 404 316 121 122 247 130 717 252 964 128 412 124 682 253 094
Deferred tax 24 164 98 918 123 082 20 131 90 796 110 927 22 529 84 713 107 242
Other liabilities 418 240 – 418 240 420 506 – 420 506 383 393 – 383 393
24 Eskom Holdings SOC Ltd
Six months ended Year ended Six months ended
30 September 2015 31 March 2015 30 September 2014
Historical Adjustments After Historical Adjustments After Historical Adjustments After
cost revaluation cost revaluation cost revaluation
Rm Rm Rm Rm Rm Rm Rm Rm Rm
Condensed
group income
statement
Profit before
depreciation and
amortisation
expense, net
impairment loss
and other expenses 33 772 – 33 772 44 738 – 44 738 31 480 – 31 480
Depreciation and
amortisation
expense (7 609) (5 010) (12 619) (14 115) (10 119) (24 234) (6 672) (5 953) (12 625)
Net impairment loss (122) – (122) (3 766) 1 149 (2 617) (855) 128 (727)
Other expenses (8 723) (187) (8 910) (15 771) (102) (15 873) (7 841) (30) (7 871)
Profit/(loss) before
net finance cost 17 318 (5 197) 12 121 11 086 (9 072) 2 014 16 112 (5 855) 10 257
Net finance cost (3 498) (10 354) (13 852) (6 109) (17 389) (23 498) (3 149) (8 284) (11 433)
Share of profit of
equity-accounted
investees 28 – 28 49 – 49 33 – 33
Profit/(loss)
before tax 13 848 (15 551) (1 703) 5 026 (26 461) (21 435) 12 996 (14 139) (1 143)
Income tax (2 539) 4 354 1 815 (1 366) 7 409 6 043 (3 675) 3 959 284
Profit/(loss) for
the period from
continuing
operations 11 309 (11 197) 112 3 660 (19 052) (15 392) 9 321 (10 180) (859)
Loss for the period
from discontinued
operations – – – (42) – (42) (34) – (34)
Profit/(loss) for
the period 11 309 (11 197) 112 3 618 (19 052) (15 434) 9 287 (10 180) (893)
Reviewed condensed group interim financial statements | 30 September 2015 25
Date: 30/11/2015 12:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
