Department of Public Enterprises DATE - 5 October, 2015 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. R’ millions Revenue: 2001 – R2 370 m 2002 – R m * IBM report stated that EE would require cash in approx. 18 months

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. Eskom Head Office PTN Mountain Comms Sapphire Exec Air & Helicopter TSI ALS Rest of BU’s Rotek Roshcon Manantali EONEnerweb 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 / & beyond... 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 EE Develop the high level strategy for EE to achieve this vision: At corporate level At 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) ScopingAnalysing Implementation Planning Strategy Organisation Design 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