Department of Public Enterprises DATE - 19 April 2023 Page 1

Transformation of Eskom Enterprises

Presenter: JUSTICE MAVHUNGU:DIRECTOR ENERGY & TELECOMMUNICATIONS

Venue: CAPE TOWN

Date : 18 JUNE 2003

Time :

EE is facing significant challenges

Our goal is to maximise value for the Group, and for our customers, through the provision of total solutions across the energy industry value chain.

421

556

13083 108

9

Gross Profit Net Oper. Income Net Profit

'01 '02

R’

mil

lio

ns

Revenue:

2001 – R2 370 m

2002 – R 2 906 m

* IBM report stated that EE would require cash in approx. 18 months

E E structure diagram

Eskom suppliedservices:— Internal Audit— Treasury— Confidential Investigations— Safety

FinanceManage

r

H / RManage

r

Co. Secr/ Legal

Committees of the Board:— Management— Audit— Remuneration— Investment & Procurement— Finance

H / O

Gvt Liaison

Esk EntAfrica Investmen

t

Electricity Africa

EON Solution

s

TSI Consulting

Trans Afr

Projects

Rotek Engineerin

g

RotekIndustrie

s

Commercial

Sapphire Exec Air

ALS

Amazing

Amanzi

Telecomms

EE~KOM

ESI~TEL

TEL~ENG

Venture Development

Equity Management

EE Africa: Regions

EE Marketing

Primary Energy

Bonesa

Coal

Natural Gas

ELGAS

FBC

Mountain Comm’s

Tele-Com Lesotho

Golang Coal

IT Services

Arivia.kom

e-Commerce

SDCT

EE Global West Africa Ltd (Nigeria)

Roshcon Division

RVS Division

Roshprop

Division

Roshcon

RVSDorman

tRoshpro

pDorman

t

PBMR

Waste Energy

PTMGESCO

SKIEskom Energie Mananta

li

HEM~KOM

TSI Operating

Lunsemfwa

(Zambia)

Co-ordination, Marketing,Deal Making,Funding

#:

# #

Board of Directors

* * * * * * * *

: Execution*

Current analysis shows net EVA “loss”

Rotek and Roshcon are the primary value creators while head office and the telecomms businesses alone destroy more value than is created.

-250

-200

-150

-100

-50

0

50

1 2 3 4 5 6 7 8 9 10 11 12 13Mil

lio

ns

EskomHead Office

PTN

Mountain Comms

Sapphire Exec Air & Helicopter

TSI ALS

Rest of BU’s

RotekRoshcon

Manantali EON Enerweb

2002 Results

Project Lambda: Transformation Programme

The challenge is to prepare Eskom Enterprises for the next stage of its evolution as a multi-business corporate

Time

EE Business Value

Jan 2003

Initial objectives:

• Formation

• Exploration

• Early growth

New challenges:

• Consolidation

• Transformation

• Repositioning

1999 / 2000 2006 & beyond

. . . where the key challenges for corporate & business strategy are consolidation, transformation and repositioning

. . . where the key challenges for corporate & business strategy are consolidation, transformation and repositioning

EE vision & strategy needs to be aligned to that of EH and ER, recognising key intra-group relationships

Eskom Holdings

Eskom Regulated

Eskom Enterprises

Eskom Holdings -

focus on industry & external Stakeholder Management

Eskom Regulated - focus on Supply &

Operations Management

Eskom Enterprises -

focus on Asset & Value Management

• Customer - Supplier relationship

• Shareholder - Investment relationship

• Principal - Agent relationship

Strategy analysis stream will develop corporate and Business Unit strategy

Objectives:Develop a coherent and compelling business vision for EEDevelop the high level strategy for EE to achieve this vision:

At corporate levelAt business unit level

Ensure the EE vision and strategy is integrated with the broader Eskom strategy (EH and ER)

Three strategic themes defined for overall direction of EE

Provision of Support Services for the ESI

Development of a Globalisation capability to drive the growth of EE and Eskom as a whole

New Enterprise Development and Management

The 3 pillar structure will allow us to focus on our different strategic objectives

The transformation project will design and drive necessary changes

We have engaged Gemini Consulting to assist in the process.

Strategic decisions will affect the portfolio and structure

The Strategy and Value Analysis streams will drive these decisions.

Business Case translates transformation benefits into financial statements

Understanding the company’s financial

levers

Focus stream efforts at points of greatest

leverage

Understanding the impact of identified

benefits on company financials

Profit & Loss Impacts

Balance Sheet Impacts

Cash flow Implications

Gross benefit

Investments

Net benefit

Revenue enhancement

Cost reduction

Cost avoidance

Capital reduction

Capital avoidance

Investment required

Time to realise

The analysis will allow EE to weigh up the benefits of transformation versus the investment required.

The result . . . a business case for EE’s future to be presented to the Board

Proposed Strategy

Investment required

Risk profile

Potential business benefits

Impact on financial

performance returns

Go / no go

decision

We are now in week 6 of the business analysis and transformation design phase

Business Analysis and Transformation Design (12 weeks)Scoping Analysing Implementation Planning

1 2 3 4 5 6 7 8 9 10 11 12

Strategy

OrganisationDesign and

Development

Transformation Enablement

Vision and strategy overview

TSI strategy review

EVA analysis

Developing corporate strategy

Business unit strategy review

Value analysis – opportunities and enterprise value

Org Design Scoping

Mgmt Profiling Scoping

Bal. Scorecard - draft

Business case development

Weeks

Complete

Validating and finalising corporate strategy

Comms baseline & readiness

Organisation Design

Management Profiling

Balanced Scorecard Validation (Level 1 – 3)

Ongoing Communications Roll-out

Project management

We are here